ICEP CSS - PMS (Global Economic Effects of COVID-19) ...

Global Economic Effects of COVID-19
Updated May 1, 2020
Congressional Research Service

https://crsreports.congress.gov
R46270
SUMMARY
R46270
May 1, 2020
Since the COVID-19 outbreak was first diagnosed, it has spread to over 190 countries and all
U.S. states. The pandemic is having a noticeable impact on global economic growth. Estimates so James K. Jackson,
far indicate the virus could trim global economic growth by as much as 2.0% per month if current Coordinator
conditions persist. Global trade could also fall by 13% to 32%, depending on the depth and extent Specialist in International
of the global economic downturn. The full impact will not be known until the effects of the Trade and Finance
pandemic peak. This report provides an overview of the global economic costs to date and the
response by governments and international institutions to address these effects.
Martin A. Weiss
Specialist in International
Trade and Finance
Andres B. Schwarzenberg
Analyst in International
Trade and Finance
Rebecca M. Nelson
Specialist in International
Trade and Finance

Contents
Overview ..........................................................................................................................................1
Economic Forecasts ..........................................................................................................................3
Global Growth............................................................................................................................3
Global Trade...............................................................................................................................8
Economic Policy Challenges ............................................................................................................9
Economic Developments ................................................................................................................10
Policy Responses ............................................................................................................................23
The United States .....................................................................................................................24
Monetary Policy .................................................................................................................24
Fiscal Policy .......................................................................................................................27
Europe ......................................................................................................................................29
The United Kingdom................................................................................................................31
Japan.........................................................................................................................................32
China ........................................................................................................................................33
Multilateral Response .....................................................................................................................33
International Monetary Fund....................................................................................................33
World Bank and Regional Development Banks .......................................................................34
International Economic Cooperation .......................................................................................35
Estimated Effects on Developed and Major Economies ................................................................36
Emerging Markets ..........................................................................................................................37
International Economic Cooperation ..............................................................................................38
Looming Debt Crises and Debt Relief Efforts ...............................................................................40
Other Affected Sectors ...................................................................................................................41
Conclusions ....................................................................................................................................43
Figures
Figure 1. IMF Projected Government Fiscal Balances Relative to GDP .........................................2
Figure 2. Gross Domestic Product, Percentage Change ...................................................................6
Figure 3. Dow Jones Industrial Average ................................................................................................. 12
Figure 4. U.S. Dollar Trade-Weighted Broad Index, Goods and Services......................................13
Figure 5. Brent Crude Oil Price per Barrel in Dollars ....................................................................17
Figure 6. Capital Flows to Emerging Markets in Global Shocks ...................................................37
Figure 7. Depreciation Against the Dollar Since January 1, 2020 ..................................................38
Tables
Table 1. OECD and IMF Economic Forecasts .................................................................................5
Table 2. WTO Forecast: Merchandise Trade Volume and Real GDP 2018-2021 .............................8
Appendixes
Appendix. Table A-1. Select Measures Implemented and Announced by Major
EconomiesResearch
Congressional in Response
Serviceto COVID-19 ........................................................................................44
Contacts
Author Information.........................................................................................................................72

Overview
The World Health Organization (WHO) first declared COVID-19 a world health emergency in
January 2020. Since the virus was first diagnosed in Wuhan, China, it has been detected in over
190 countries and all U.S. states.1 In early March, the focal point of infections shifted from China
to Europe, especially Italy, but by April 2020, the focus shifted to the United States, where the
number of infections was accelerating. The infection has sickened more than 3.2 million people,
about one-third in the United States, with thousands of fatalities. More than 80 countries have
closed their borders to arrivals from countries with infections, ordered businesses to close,
instructed their populations to self-quarantine, and closed schools to an estimated 1.5 billion
children.2
In late January 2020, China was the first country to impose travel restrictions, followed by South
Korea and Vietnam. Over the five-week period from mid-March to late-April 2020, more than 30
million Americans filed for unemployment insurance, raising the prospect of a deep economic
recession and a significant increase in the unemployment rate.3 Preliminary data for the first
quarter of 2020 indicate that U.S. GDP fell by 4.8% at an annual rate, the largest quarterly decline
in GDP since the fourth quarter of 2008 during the global financial crisis when the U.S. economy
contracted by 8.4%.4 Foreign investors have pulled an estimated $26 billion out of developing
Asian economies and more than $16 billion out of India, increasing concerns of a major economic
recession in Asia. Some estimates also indicate that 29 million people in Latin America could fall
into poverty, reversing a decade of efforts to narrow income inequality. In Europe, over 30
million people in Germany, France, the UK, Spain, and Italy have applied for state support of
their wages, while first quarter 2020 data indicate that the Eurozone economy contracted by 3.8%
at an annual rate, the largest quarterly decline since the series started in 1995.5
The pandemic crisis is challenging governments to implement monetary and fiscal policies that
support credit markets and sustain economic activity. In doing so, however, these policy
approaches are displaying differences between countries that promote nationalism versus those
that argue for a coordinated international response. They also are intensifying policy differences
between developed and developing economies and in Europe between northern and southern
members of the Eurozone.
After a delayed response, central banks are engaging in an ongoing series of interventions in
financial markets and national governments are announcing fiscal policy initiatives to stimulate
1 ―Mapping the Spread of the COVID-19 in the U.S. and Worldwide,‖ Washington Post Staff, Washington Post, March
4, 2020. https://www.washingtonpost.com/world/2020/01/22/mapping-spread-new-COVID-19/?arc404=true.
2 ―The Day the World Stopped: How Governments Are Still Struggling to Get Ahead of the COVID-19,‖ The
Economist, March 17, 2020. https://www.economist.com/international/2020/03/17/governments-are-still-struggling-to-

get-ahead-of-the-COVID-19.
3 Unemployment Insurance Weekly Claims, Department of Labor, April 30, 2020. https://www.dol.gov/; Long, Heather,
Over 10 Million Americans Applied for Unemployment Benefits in March as Economy Collapsed, The Washington
Post, April 2, 2020. https://www.washingtonpost.com/business/2020/04/02/jobless-march-COVID-19.
4 Gross Domestic Product, First Quarter 2020 (Advance Estimate), Bureau of Economic Analysis, April 29, 2020.
https://www.bea.gov/data/gdp/gross-domestic-product.
5 Stott, Michael, Coronavirus Set to Push 29m Latin Americans Into Poverty, Financial Times, April 24, 2020.
https://www.ft.com/content/3bf48b80-8fba-410c-9bb8-31e33fffc3b8; Hall, Benjamin, Coronavirus Pandemic

Threatens Livelihoods of 59m European Workers, Financial Times, April 19, 2020, https://www.ft.com/content/
36239c82-84ae-4cc9-89bc-8e71e53d6649, Romei, Valentina and Martin Arnold, Eurozone Economy Shrinks by
Fastest Rate on Record, Financial Times, April 30, 2020, https://www.ft.com/content/dd6cfafa-a56d-48f3-a9fd-
aa71d17d49a8.
Congressional Research Service 1

their economies. International organizations are also taking steps to provide loans and other
financial assistance to countries in need. These and other actions have been labeled
―unprecedented,‖ a term that has been used frequently to describe the pandemic and the policy
responses. The International Monetary Fund (IMF) estimated that government spending and
revenue measures to sustain economic activity adopted through mid-April 2020 amounted to $3.3
trillion and that loans, equity injections and guarantees totaled an additional $4.5 trillion.6 As a
result, the IMF estimates that the increase in borrowing by governments globally will rise from
3.7% of global gross domestic product (GDP) in 2019 to 9.9% in 2020, as indicated in Figure 1.
Among developed economies, the fiscal balance to GDP ratio is projected to rise from 3.0% in
2019 to 10.7% in 2020; the ratio for the United States is projected to rise from 5.8% to 15.7%.
For developing economies, the fiscal balance to GDP ratio is projected to rise from 4.8% to
9.1%.7 According to the IMF, France, Germany, Italy, Japan, and the United Kingdom have each
announced public sector support measures totaling more than 10% of their annual GDP.8
Figure 1. IMF Projected Government Fiscal Balances Relative to GDP

In percentage shares of Gross Domestic Product
Source: Fiscal Monitor, International Monetary Fund, April 14, 2020.

Note: Data for 2020 are estimates.
Among central banks, the Federal Reserve has taken extraordinary steps not experienced since the
2008-2009 global financial crisis to address the growing economic effects of COVID-19. The
U.S. Congress also has approved historic fiscal spending packages. In other countries, central
banks have lowered interest rates and reserve requirements, announced new financing facilities,
relaxed capital buffers and, in some cases, countercyclical capital buffers,9 adopted after the
2008-2009 financial crisis, potentially freeing up an estimated $5 trillion in funds.10 Capital
6 Global Financial Stability Report, International Monetary Fund, April 14, 2020. P. 2;
7 Ibid., p. 6.
8 FiscalMonitor, International Monetary Fund, April 14, 2020, p. 2.
9 Countercyclical capital buffers require banks to increase their capital buffers during periods of rapid growth in assets
(when they are making a lot of loans), to ensure they have sufficient capital to absorb losses during a recession.
Countercyclical Capital Buffers, Bank for International Settlements, April 3, 2020. https://www.bis.org/bcbs/ccyb/.
10 Arnold, Martin, ―Regulators Free up $500bn Capital for Lenders to Fight Virus Storm,‖ Financial Times, April 7,

buffers were raised after the financial crisis to assist banks in absorbing losses and staying solvent
during financial crises. In some cases, governments have directed banks to freeze dividend
payments and halt pay bonuses.
On March 11, the WHO announced that the outbreak was officially a pandemic, the highest level
of health emergency.11 A growing list of economic indicators makes it clear that the outbreak is
negatively affecting global economic growth on a scale that has not been experienced since at
least the global financial crisis of 2008-2009.12 Global trade and GDP are forecast to decline
sharply at least through the first half of 2020. The global pandemic is affecting a broad swath of
international economic and trade activities, from services generally to tourism and hospitality,
medical supplies and other global value chains, consumer electronics, and financial markets to
energy, transportation, food, and a range of social activities, to name a few. The health and
economic crises could have a particularly negative impact on the economies of developing
countries that are constrained by limited financial resources and where health systems could
quickly become overloaded.
Without a clear understanding of when the global health and economic effects may peak and a
greater understanding of the impact on economies, forecasts must necessarily be considered
preliminary. Similarly, estimates of when any recovery might begin and the speed of the recovery
are speculative. Efforts to reduce social interaction to contain the spread of the virus are
disrupting the daily lives of most Americans and adding to the economic costs. Increasing rates of
unemployment are raising the prospects of wide-spread social unrest and demonstrations in
developed economies where lost incomes and health insurance are threatening living standards
and in developing economies where populations reportedly are growing concerned over access to
basic necessities and the prospects of rising levels of poverty.13 U.N. Secretary General Antonio
Guterres argued in a video conference before the U.N. Security Council on April 10, 2020, that
the
pandemic also poses a significant threat to the maintenance of international peace and
security—potentially leading to an increase in social unrest and violence that would greatly
undermine our ability to fight the disease.14
Economic Forecasts
Global Growth
The economic situation remains highly fluid. Uncertainty about the length and depth of the health
crisis-related economic effects are fueling perceptions of risk and volatility in financial markets
2020. https://www.ft.com/content/9a677506-a44e-4f69-b852-4f34018bc45f.
11 Bill Chappell, ―COVID-19: COVID-19 Is Now Officially a Pandemic, WHO Says,‖ National Public Radio, March
11, 2020, https://www.npr.org/sections/goatsandsoda/2020/03/11/814474930/COVID-19-COVID-19-is-now-officially-

a-pandemic-who-says.
12 Mapping the Spread of the COVID-19.
13 Sly, Liz, Stirrings of Unrest Around the World Could Portend Turmoil as Economies Collapse, The Washington
Post, April 19, 2020; Ingraham, Christopher, Coronavirus Recession Could Plunge Tens of Millions Into Poverty, New
Report Warns, The Washington Post, April 20, 2020. https://www.washingtonpost.com/business/2020/04/20/
coronavirus-recession-could-plunge-tens-millions-into-poverty-new-report-warns/.
14 Secretary-General’s Remarks to the Security Council on the COVID-19 Pandemic, United Nations, April 9, 2020.
https://www.un.org/sg/en/content/sg/statement/2020-04-09/secretary-generals-remarks-the-security-council-the-covid-
19-pandemic-delivered.

and corporate decision-making. In addition, uncertainties concerning the global pandemic and the
effectiveness of public policies intended to curtail its spread are adding to market volatility.
Compounding the economic situation is a historic drop in the price of crude oil that reflects the
global decline in economic activity, prospects for disinflation, and contributes to the decline of
the global economy through various channels. On April 29, 2020, Federal Reserve Chairman Jay
Powell stated that the Federal Reserve would use its ―full range of tools‖ to support economic
activity as the Commerce Department reported a 4.8% drop in U.S. GDP in the first quarter of
2020. In assessing the state of the U.S. economy, the Federal Open Market Committee released a
statement indicating that, ―The ongoing public health crisis will weigh heavily on economic
activity, employment, and inflation in the near term, and poses considerable risks to the economic
outlook over the medium term.‖15
The Organization for Economic Cooperation and Development (OECD) on March 2, 2020,
lowered its forecast of global economic growth by 0.5% for 2020 from 2.9% to 2.4%, based on
the assumption that the economic effects of the virus would peak in the first quarter of 202016 (see
Table 1). However, the OECD estimated that if the economic effects of the virus did not peak in
the first quarter, which is now apparent that it did not, global economic growth would increase by
1.5% in 2020. That forecast now seems to have been highly optimistic.
On March 23, 2020, OECD Secretary General Angel Gurria stated that
The sheer magnitude of the current shock introduces an unprecedented complexity to
economic forecasting. The OECD Interim Economic Outlook, released on March 2, 2020,
made a first attempt to take stock of the likely impact of COVID-19 on global growth, but
it now looks like we have already moved well beyond even the more severe scenario
envisaged then…. [T]he pandemic has also set in motion a major economic crisis that will
burden our societies for years to come.17
On March 26, 2020, the OECD revised its global economic forecast based on the continued
effects of the pandemic and measures governments have adopted to contain the spread of the
virus. According to the updated estimate, the current containment measures could reduce global
GDP by 2.0% per month, or an annualized rate of 24%, approaching the level of economic
contraction not experienced since the Great Depression of the 1930s. The OECD estimates in
Table 1 will be revised when the OECD releases updated country-specific data.
Labeling the projected decline in global economic activity as the ―Great Lockdown,‖ the IMF
released an updated forecast on April 14, 2020. The IMF concluded that the global economy
would experience its ―worst recession since the Great Depression, surpassing that seen during the
global financial crisis a decade ago.‖18 In addition, the IMF estimated that the global economy
could decline by 3.0% in 2020, before growing by 5.8% in 2021; global trade is projected to fall
in 2020 by 11.0% and oil prices are projected to fall by 42%, also shown in Table 1.19 This
forecast assumes that the pandemic fades in the second half of 2020 and that the containment
measures can be reversed quickly. The IMF also stated that many countries are facing a multi-
layered crisis that includes a health crisis, a domestic economic crisis, falling external demand,
15 Federal Reserve Issues FOMC Statement, Board of Governors of the Federal Reserve System, April 29, 2020.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200429a.htm.
16 OECD Interim Economic Assessment: COVID-19: The World Economy at Risk, Organization for Economic
Cooperation and Development. March 2, 2020. http://www.oecd.org/economic-outlook/#resources.

17 COVID-19: Joint Actions to Win the War, Organization for Economic Cooperation and Development, March 23,
2020. https://www.oecd.org/COVID-19/#op-ed.
18 World Economic Outlook, International Monetary Fund, April 14, 2020, p. v.
19 The IMF database indicates that global GDP fell by 0.075% in 2009 during the height of the global financial crisis.

capital outflows, and a collapse in commodity prices. In combination, these various effects are
interacting in ways that make forecasting difficult.
Table 1. OECD and IMF Economic Forecasts

Percentage change in Real GDP Growth
OECD March 2020 IMF April 2020
Projections Projections
2019 2020 2021 2019 2020 2021

World 2.9% 2.4% 3.3% World 2.9% –3.0% 5.8%
G20 3.1 2.7 3.5 Adv. Economies 1.7 –6.1 4.5
Australia 1.7 1.8 2.6 United States 2.3 –5.9 4.7
Canada 1.6 1.3 1.9 Euro Area 1.2 –7.5 4.7
Euro area 1.2 0.8 1.2 Germany 0.6 –7.0 5.2
Germany 0.6 0.3 0.9 France 1.3 –7.2 4.5
France 1.3 0.9 1.4 Italy 0.3 –9.1 4.8
Italy 0.2 0.0 0.5 Spain 2.0 –8.0 4.3
Japan 0.7 0.2 0.7 Japan 0.7 –5.2 3.0
Korea 2.0 2.0 2.3 United Kingdom 1.4 –6.5 4.0
Mexico -0.1 0.7 1.4 Canada 1.6 –6.2 4.2
Turkey 0.9 2.7 3.3 China 6.1 1.2 9.2
United Kingdom 1.4 0.8 0.8 India 4.2 1.9 7.4
United States 2.3 1.9 2.1 Russia 1.3 –5.5 3.5
Argentina -2.7 -2.0 0.7 Latin America 0.1 –5.2 3.4
Brazil 1.1 1.7 1.8 Brazil 1.1 –5.3 2.9
China 6.1 4.9 6.4 Mexico –0.1 –6.6 3.0
India 4.9 5.1 5.6 Middle East 1.2 –2.8 4.0
Indonesia 5.0 4.8 5.1 Saudi Arabia 0.3 –2.3 2.9
Sub-Saharan
Russia 1.0 1.2 1.3 Africa 3.1 –1.6 4.1
Saudi Arabia 0.0 1.4 1.9 Nigeria 2.2 –3.4 2.4
South Africa 0.3 0.6 1.0 South Africa 0.2 –5.8 4.0
World Trade
Volume 0.9 –11.0 8.4
Oil prices ($) –10.2 –42.0 6.3
Source: OECD Interim Economic Assessment: COVID-19: The World Economy at Risk, Organization for Economic
Cooperation and Development. March 2, 2020, p. 2; World Economic Outlook, International Monetary Fund, April
14, 2020, p. ix.
Advanced economies as a group are forecast to experience an economic contraction in 2020 of

7.8% of GDP, with the U.S. economy projected by the IMF to decline by 5.9%, about twice the
rate of decline experienced in 2009 during the financial crisis, as indicated in Figure 2. The rate
of economic growth in the Euro area is projected to decline by 7.5% of GDP. Most developing

and emerging economies are projected to experience a decline in the rate of economic growth of
2.0%, reflecting tightening global financial conditions and falling global trade and commodity
prices. In contrast, China, India, and Indonesia are projected to experience small, but positive
rates of economic growth in 2020. The IMF also argues that recovery of the global economy
could be weaker than projected as a result of: lingering uncertainty about possible contagion, lack
of confidence, and permanent closure of businesses and shifts in the behavior of firms and
households.20
Figure 2. Gross Domestic Product, Percentage Change
Source: World Economic Outlook, International Monetary Fund, April 14, 2020.
Note: Data for 2020 and 2021 are estimates.
As a result of the various challenges, the IMF qualified its forecast by arguing that
A partial recovery is projected for 2021, with above trend growth rates, but the level of
GDP will remain below the pre-virus trend, with considerable uncertainty about the
strength of the rebound. Much worse growth outcomes are possible and maybe even likely.
This would follow if the pandemic and containment measures last longer, emerging and
developing economies are even more severely hit, tight financial conditions persist, or if
widespread scarring effects emerge due to firm closures and extended unemployment.21
Before the COVID-19 outbreak, the global economy was struggling to regain a broad-based
recovery as a result of the lingering impact of growing trade protectionism, trade disputes among
major trading partners, falling commodity and energy prices, and economic uncertainties in
Europe over the impact of the UK withdrawal from the European Union. Individually, each of
these issues presented a solvable challenge for the global economy. Collectively, however, the
issues weakened the global economy and reduced the available policy flexibility of many national
leaders, especially among the leading developed economies. In this environment, COVID-19
could have an outsized impact. While the level of economic effects will eventually become
clearer, the response to the pandemic could have a significant and enduring impact on the way
20 World Economic Outlook, p. 9.

21 Ibid., p. v.

businesses organize their work forces, global supply chains, and how governments respond to a
global health crisis.22
The OECD estimates that increased direct and indirect economic costs through global supply
chains, reduced demand for goods and services, and declines in tourism and business travel mean
that, ―the adverse consequences of these developments for other countries (non-OECD) are
significant.‖23 Global trade, measured by trade volumes, slowed in the last quarter of 2019 and
was expected to decline further in 2020, as a result of weaker global economic activity associated
with the pandemic, which is negatively affecting economic activity in various sectors, including
airlines, hospitality, ports, and the shipping industry.24
According to the OECD‘s updated forecast
 The greatest impact of the containment restrictions will be on retail and
wholesale trade, and in professional and real estate services, although there are
notable differences between countries.
 Business closures could reduce economic output in advanced and major
emerging economies by 15% or more; other emerging economies could
experience a decline in output of 25%.
 Countries dependent on tourism could be affected more severely, while countries
with large agricultural and mining sectors could experience less severe effects.
 Economic effects likely will vary across countries reflecting differences in the
timing and degree of containment measures.25
In addition, the OECD argues that China‘s emergence as a global economic actor marks a
significant departure from previous global health episodes. China‘s growth, in combination with
globalization and the interconnected nature of economies through capital flows, supply chains,
and foreign investment, magnify the cost of containing the spread of the virus through
quarantines and restrictions on labor mobility and travel.26 China‘s global economic role and
globalization mean that trade is playing a role in spreading the economic effects of COVID-19.
More broadly, the economic effects of the pandemic are being spread through three trade
channels: (1) directly through supply chains as reduced economic activity is spread from
intermediate goods producers to finished goods producers; (2) as a result of a drop overall in
economic activity, which reduces demand for goods in general, including imports; and (3)
through reduced trade with commodity exporters that supply producers, which, in turn, reduces
their imports and negatively affects trade and economic activity of exporters.
22 Rowland, Christopher and Peter Whoriskey, ―U.S. Health System is Showing Why It‘s Not Ready for a COVID-19
Pandemic,‖ Washington Post, March 4, 2020. https://www.washingtonpost.com/business/economy/the-us-health-
system-is-showing-why-its-not-ready-for-a-COVID-19-pandemic/2020/03/04/7c307bb4-5d61-11ea-b29b-
9db42f7803a7_story.html.
23 Ibid., p. 2.
24 Ibid., p. 4.
25 Evaluating the Initial Impact of COVID Containment Measures on Activity, Organization for Economic Cooperation
and Development, March 27, 2020.

26 Goldin, Ian, ―COVID-19 Shows How Globalization Spreads Contagion of All Kinds,‖ Financial Times, March 2,
2020. https://www.ft.com/content/70300682-5d33-11ea-ac5e-df00963c20e6.

Global Trade
According to an April 8, 2020, forecast by the World Trade Organization (WTO), global trade
volumes are projected to decline between 13% and 32% in 2020 as a result of the economic
impact of COVID-19, as indicated in Table 2. The WTO argues that the wide range in the
forecast represents the high degree of uncertainty concerning the length and economic impact of
the pandemic and that the actual economic outcome could be outside this range, either higher or
lower. The WTO‘s more optimistic scenario assumes that trade volumes recover quickly in the
second half of 2020 to their pre-pandemic trend, or that the global economy experiences a V-
shaped recovery. The more pessimistic scenario assumes a partial recovery that lasts into 2021, or
that global economic activity experiences more of a U-shaped recovery. The WTO concludes,
however, that the impact on global trade volumes could exceed the drop in global trade during the
height of the 2008-2009 financial crisis.27
Table 2.WTO Forecast: Merchandise Trade Volume and Real GDP 2018-2021
Annual percentage change
Optimistic Pessimistic
Historical scenario scenario
2018 2019 2020 2021 2020 2021

Volume of world merchandise trade 2.9% -0.1% -12.9% 21.3% -31.9% 24.0%
Exports
North America 3.8 1.0 -17.1 23.7 -40.9 19.3
South and Central America 0.1 -2.2 -12.9 18.6 -31.3 14.3
Europe 2.0 0.1 -12.2 20.5 -32.8 22.7
Asia 3.7 0.9 -13.5 24.9 -36.2 36.1
Other regions 0.7 -2.9 -8.0 8.6 -8.0 9.3
Imports
North America 5.2 -0.4 -14.5 27.3 -33.8 29.5
South and Central America 5.3 -2.1 -22.2 23.2 -43.8 19.5
Europe 1.5 0.5 -10.3 19.9 -28.9 24.5
Asia 4.9 -0.6 -11.8 23.1 -31.5 25.1
Other regions 0.3 1.5 -10 13.6 -22.6 18.0
Real GDP at market exchange rates 2.9 2.3 -2.5 7.4 -8.8 5.9
North America 2.8 2.2 -3.3 7.2 -9.0 5.1
South and Central America 0.6 0.1 -4.3 6.5 -11 4.8
Europe 2.1 1.3 -3.5 6.6 -10.8 5.4
Asia 4.2 3.9 -0.7 8.7 -7.1 7.4
Other regions 2.1 1.7 -1.5 6.0 -6.7 5.2
Source: Trade Set to Plunge as COVID-19 Pandemic Upends Global Economy, World Trade Organization, April 8,
2020.
27 Trade Set to Plunge as COVID-19 Pandemic Upends Global Economy, World Trade Organization, April 8, 2020.
https://www.wto.org/english/news_e/pres20_e/pr855_e.htm.

Note: Data for 2020 and 2021 are projections; GDP projections are based on scenarios simulated with the
WTO Global Trade Model.
The estimates indicate that all geographic regions will experience a double-digit drop in trade
volumes, except for ―other regions,‖ which consists of Africa, the Middle East, and the
Commonwealth of Independent States. North America and Asia could experience the steepest
declines in export volumes. The forecast also projects that sectors with extensive value chains,
such as automobile products and electronics, could experience the steepest declines. Although
services are not included in the WTO forecast, this segment of the economy could experience the
largest disruption as a consequence of restrictions on travel and transport and the closure of retail
and hospitality establishments. Such services as information technology, however, are growing to
satisfy the demand of employees who are working from home.
Economic Policy Challenges

The challenge for policymakers has been one of implementing targeted policies that address what
had been expected to be short-term problems without creating distortions in economies that can
outlast the impact of the virus itself. Policymakers, however, are being overwhelmed by the
quickly changing nature of the global health crisis that appears to be turning into a global trade
and economic crisis whose effects on the global economy are escalating. As the economic effects
of the pandemic grow, policymakers are giving more weight to policies that address the
immediate economic effects at the expense of longer-term considerations such as debt
accumulation. Initially, many policymakers had felt constrained in their ability to respond to the
crisis as a result of limited flexibility for monetary and fiscal support within conventional
standards, given the broad-based synchronized slowdown in global economic growth, especially
in manufacturing and trade that had developed prior to the viral outbreak. The pandemic is also
affecting global politics as world leaders are cancelling international meetings28 and some nations
reportedly are stoking conspiracy theories that shift blame to other countries.29
Initially, the economic effects of the virus were expected to be short-term supply issues as factory
output fell because workers were quarantined to reduce the spread of the virus through social
interaction. The drop in economic activity, initially in China, has had international repercussions
as firms experienced delays in supplies of intermediate and finished goods through supply chains.
Concerns are growing, however, that the virus-related supply shock is creating more prolonged
and wide-ranging demand shocks as reduced activity by consumers and businesses lead to a lower
rate of economic growth. As demand shocks unfold, businesses experience reduced activity and
profits and potentially escalating and binding credit and liquidity constraints. While
manufacturing firms are experiencing supply chain shocks, reduced consumer activity through
social distancing is affecting the services sector of the economy, which accounts for two-thirds of
annual U.S. economic output. In this environment, manufacturing and service firms have tended
to hoard cash, which affects market liquidity. In response, central banks have lowered interest
rates where possible and expanded lending facilities to provide liquidity to financial markets and
to firms potentially facing insolvency.
The longer the economic effects persist, the greater the economic impacts are likely to be as the
effects are spread through trade and financial linkages to an ever-broadening group of countries,
28 Taylor,Adam, Teo Armus, and Rick Noak, ―Live updates: COVID-19 Turmoil Widens as U.S. Death Toll Mounts;
Xi Cancels Japan Trip, Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/COVID-
19-live-updates/.
29 Shih, Gerry, ―China Is Subtly Stoking COVID-19 Conspiracy Theories That Blame the U.S. for Outbreak,‖
Washington Post, March 5, 2020. https://www.washingtonpost.com/world/2020/03/05/COVID-19-live-updates/.

firms and households. These growing economic effects potentially increase liquidity constraints
and credit market tightening in global financial markets as firms hoard cash, with negative fallout
effects on economic growth. At the same time, financial markets are factoring in an increase in
government bond issuance in the United States, Europe, and elsewhere as government debt levels
are set to rise to meet spending obligations during an expected economic recession and increased
fiscal spending to fight the effects of COVID-19. Unlike the 2008-2009 financial crisis, reduced
demand by consumers, labor market issues, and a reduced level of activity among businesses,
rather than risky trading by global banks, has led to corporate credit issues and potential
insolvency. These market dynamics have led some observers to question if these events mark the
beginning of a full-scale global financial crisis.30
Liquidity and credit market issues present policymakers with a different set of challenges than
addressing supply-side constraints. As a result, the focus of government policy has expanded
from a health crisis to macroeconomic and financial market issues that are being addressed
through a combination of monetary, fiscal, and other policies, including border closures,
quarantines, and restrictions on social interactions. Essentially, while businesses are attempting to
address worker and output issues at the firm level, national leaders are attempting to implement
fiscal policies to prevent economic growth from falling sharply by assisting workers and
businesses that are facing financial strains, and central bankers are adjusting monetary policies to
address mounting credit market issues.
In the initial stages of the health crisis, households did not experience the same kind of wealth
losses they saw during the 2008-2009 financial crisis when the value of their primary residence
dropped sharply. However, with unemployment numbers rising rapidly, job losses could result in
defaults on mortgages and delinquencies on rent payments, unless financial institutions provide
loan forbearance or there is a mechanism to provide financial assistance. In turn, mortgage
defaults could negatively affect the market for mortgage-backed securities, the availability of
funds for mortgages, and negatively affect the overall rate of economic growth. Losses in the
value of most equity markets in the U.S., Asia, and Europe could also affect household wealth,
especially retirees living on a fixed income and others who own equities. Investors that trade in
mortgage-backed securities reportedly have been reducing their holdings while the Federal
Reserve has been attempting to support the market.31 In the current environment, even traditional
policy tools, such as monetary accommodation, apparently have not been processed by markets in
a traditional manner, with equity market indices displaying heightened, rather than lower, levels
of uncertainty following the Federal Reserve‘s cut in interest rates. Such volatility is adding to
uncertainties about what governments can do to address weaknesses in the global economy.
Economic Developments
Between late February and April, 2020, financial markets from the United States to Asia and
Europe have been whipsawed as investors have grown concerned that COVID-19 would create a
global economic and financial crisis with few metrics to indicate how prolonged and extensive
the economic effects may be.32 Investors have searched for safe-haven investments, such as the
30 Foroohar,Rana, ―How COVID-19 Became a Corporate Credit Run,‖ Financial Times, March 15, 2020.
https://www.ft.com/content/f1ea5096-6531-11ea-a6cd-df28cc3c6a68.
31 Armstrong, Robert, ―Mortgage Investment Funds Become ‗Epicenter‘ of Crisis,‖ Financial Times, March 24, 2020.
https://www.ft.com/content/18909cda-6d40-11ea-89df-41bea055720b.
32 Samson, Adam and Hudson Lockett, ―Stocks Fall Again in Worst Week Since 2008 Crisis,‖ Financial Times,
February 28. https://www.ft.com/content/4b23a140-59d3-11ea-a528-dd0f971febbc.

benchmark U.S. Treasury 10-year security, which experienced a historic drop in yield to below
1% on March 3, 2020.33 In response to concerns that the global economy was in a freefall, the
Federal Reserve lowered key interest rates on March 3, 2020, to shore up economic activity,
while the Bank of Japan engaged in asset purchases to provide short-term liquidity to Japanese
banks; Japan‘s government indicated it would also assist workers with wage subsidies. The Bank
of Canada also lowered its key interest rate. The International Monetary Fund (IMF) announced
that it was making about $50 billion available through emergency financing facilities for low-
income and emerging market countries and funds available through its Catastrophe Containment
and Relief Trust (CCRT).34
Reflecting investors‘ uncertainties, the Dow Jones Industrial Average (DJIA) lost about one-third
of its value between February 14, 2020, and March 23, 2020, as indicated in Figure 3.
Expectations that the U.S. Congress would adopt a $2.0 trillion spending package moved the
DJIA up by more than 11% on March 24, 2020. From March 23 to April 15, the DJIA moved
higher by18%. Since then, the DJIA has moved erratically as investors have weighed news about
the human cost and economic impact of the pandemic and the prospects of various medical
treatments. For some policymakers, the drop in equity prices has raised concerns that foreign
investors might attempt to exploit the situation by increasing their purchases of firms in sectors
considered important to national security. Ursula von der Leyen, president of the European
Commission, urged EU members to better screen foreign investments, especially in areas such as
health, medical research, and critical infrastructure.35
Similar to the 2008-2009 global financial crisis, central banks have implemented a series of
monetary operations to provide liquidity to their economies. These actions, however, initially
were not viewed entirely positively by all financial market participants who questioned the use of
policy tools by central banks that are similar to those employed during the 2008-2009 financial
crisis, despite the fact that the current and previous crisis are fundamentally different in origin.
During the previous financial crisis, central banks intervened to restart credit and spending by
banks that had engaged in risky assets. In the current environment, central banks are attempting to
address financial market volatility and prevent large-scale corporate insolvencies that reflect the
underlying economic uncertainty caused by the pandemic.
33 The price and yield of a bond are inversely related; increased demand for Treasury securities raises their price, which
lowers their yield. Levisohn, Ben, ―The 10-Year Treasury Yield Fell Below 1% for the First Time Ever. What That
Means,‖ Barrons, March 3, 2020. https://www.barrons.com/articles/the-10-year-treasury-yield-fell-below-1-for-the-
first-time-ever-what-that-means-51583267310.
34 Georgieva, Kristalina, ―Potential Impact of the COVID-19 Epidemic: What We Know and What We Can Do,‖
International Monetary Fund, March 4, 2020. https://blogs.imf.org/2020/03/04/potential-impact-of-the-COVID-19-

epidemic-what-we-know-and-what-we-can-do/.
35 Chazan, Guy and Jim Brunsden, ―COVID-19 Crisis Pushes Europe into Nationalist Economic Turn,‖ Financial
Times, March 26, 2020. https://www.ft.com/content/79c0ae80-6df1-11ea-89df-41bea055720b.

Figure 3. Dow Jones Industrial Average

February 14, 2020, to April 30, 2020
Source: Financial Times.
Similar to conditions during the 2008-2009 financial crisis, the dollar has emerged as the
preferred currency by investors, reinforcing its role as the dominant global reserve currency. As
indicated in Figure 4, the dollar appreciated more than 3.0% during the period between March 3
and March 13, 2020, reflecting increased international demand for the dollar and dollar-
denominated assets. Since the highs reached on March 23, the dollar has given up some of its
value against other currencies, but has remained about 10% higher than it was at the beginning of
the year. According to a recent survey by the Bank for International Settlements (BIS),36 the
dollar accounts for 88% of global foreign exchange market turnover and is key in funding an
array of financial transactions, including serving as an invoicing currency to facilitate
international trade. It also accounts for two-thirds of central bank foreign exchange holdings, half
of non-U.S. banks foreign currency deposits, and two-thirds of non-U.S. corporate borrowings
from banks and the corporate bond market.37 As a result, disruptions in the smooth functioning of
the global dollar market can have wide-ranging repercussions on international trade and financial
transactions.
The international role of the dollar also increases pressure on the Federal Reserve essentially to
assume the lead role as the global lender of last resort. Reminiscent of the financial crisis, the
global economy has experienced a period of dollar shortage, requiring the Federal Reserve to take
numerous steps to ensure the supply of dollars to the U.S. and global economies, including
activating existing currency swap arrangements, establishing such arrangements with additional
central banks, and creating new financial facilities to provide liquidity to central banks and
monetary authorities.38 Typically, banks lend long-term and borrow short-term and can only
borrow from their home central bank. In turn, central banks can only provide liquidity in their
36 Foreign Exchange Turnover in April 2019, Bank for International Settlements, September 16, 2019.
https://www.bis.org/statistics/rpfx19_fx.htm.
37 See CRS In Focus IF10112, Introduction to Financial Services: The International Foreign Exchange Market.
38 Politi, James, Brendan Greeley, and Colby Smith, ―Fed Sets Up Scheme to Meet Booming Foreign Demand for
Dollars,‖ Financial Times, March 31, 2020. https://www.ft.com/content/6c976586-a6ea-42ec-a369-9353186c05bb.

own currency. Consequently, a bank can become illiquid in a panic, meaning it cannot borrow in
private markets to meet short-term cash flow needs. Swap lines are designed to allow foreign
central banks the funds necessary to provide needed liquidity to their country‘s banks in dollars.
Figure 4. U.S. Dollar Trade-Weighted Broad Index, Goods and Services
Source: St. Louis Federal Reserve Bank.

Note: January 2006 = 100.
The yield on U.S. Treasury securities dropped to historic levels on March 6, 2020, and March 9,
2020, as investors continued to move out of stocks and into Treasury securities and other
sovereign bonds, including UK and German bonds, due in part to concerns over the impact the
pandemic would have on economic growth and expectations the Federal Reserve and other
central banks would lower short-term interest rates.39 On March 5, the U.S. Congress passed a $8
billion spending bill to provide assistance for health care, sick leave, small business loans, and
international assistance. At the same time, commodity prices dropped sharply as a result of
reduced economic activity and disagreements among oil producers over production cuts in crude
oil and lower global demand for commodities, including crude oil.
The drop in some commodity prices raised concerns about corporate profits and led some
investors to sell equities and buy sovereign bonds. In overnight trading in various sessions
between March 8, and March 24, U.S. stock market indexes moved sharply (both higher and
lower), triggering automatic circuit breakers designed to halt trading if the indexes rise or fall by
more than 5% when markets are closed and 7% when markets are open.40 By early April, the
global mining industry had reduced production by an estimated 20% in response to falling
demand and labor quarantines and as a strategy to raise prices.41
39 Smith,Colby, Richard Henderson, Philip Georgiadis, and Hudson Lockett, ―Stocks Tumble and Government Bonds
Hit Highs on Virus Fears,‖ Financial Times, March 6, 2020. https://www.ft.com/content/9f94d6f8-5f51-11ea-b0ab-
339c2307bcd4.
40 Georgiadis, Philip, Adam Samson, and Hudson Lockett, ―Stocks Plummet as Oil Crash Shakes Financial Markets,‖
Financial Times, March 9, 2020. https://www.ft.com/content/8273a32a-61e4-11ea-a6cd-df28cc3c6a68.

41 Hume, Neil, ―Mine Closures Bolster Metals Prices as Demand Collapses,‖ Financial Times, April 7, 2020.

Ahead of a March 12, 2020, scheduled meeting of the European Central Bank (ECB), the German
central bank (Deutsche Bundesbank) announced a package of measures to provide liquidity
support to German businesses and financial support for public infrastructure projects.42 At the
same time, the Fed announced that it was expanding its repo market transactions (in the
repurchase market, investors borrow cash for short periods in exchange for high-quality collateral
like Treasury securities) after stock market indexes fell sharply, government bond yields fell to
record lows (reflecting increased demand), and demand for corporate bonds fell. Together these
developments raised concerns for some analysts that instability in stock markets could threaten
global financial conditions.43
On March 11, as the WHO designated COVID-19 a pandemic, governments and central banks
adopted additional monetary and fiscal policies to address the growing economic impact.
European Central Bank (ECB) President-designate Christine Lagarde in a conference call to EU
leaders warned that without coordinated action, Europe could face a recession similar to the
2008-2009 financial crisis.44 The Bank of England lowered its key interest rate, reduced capital
buffers for UK banks, and provided a funding program for small and medium businesses. The UK
Chancellor of the Exchequer also proposed a budget that would appropriate £30 billion (about
$35 billion) for fiscal stimulus spending, including funds for sick pay for workers, guarantees for
loans to small businesses, and cuts in business taxes. The European Commission announced a €25
billion (about $28 billion) investment fund to assist EU countries and the Federal Reserve
announced that it would expand its repo market purchases to provide larger and longer-term
funding to provide added liquidity to financial markets.
President Trump imposed restrictions on travel from Europe to the United States on March 12,
2020, surprising European leaders and adding to financial market volatility.45 At its March 12
meeting, the ECB announced €27 billion (about $30 billion) in stimulus funding, combining
measures to expand low-cost loans to Eurozone banks and small and medium-sized businesses
and implement an asset purchase program to provide liquidity to firms. Germany indicated that it
would provide tax breaks for businesses and ―unlimited‖ loans to affected businesses. The ECB‘s
Largarde roiled markets by stating that it was not the ECB‘s job to ―close the spread‖ between
Italian and German government bond yields (a key risk indicator for Italy), a comment reportedly
interpreted as an indicator the ECB was preparing to abandon its support for Italy, a notion that
was denied by the ECB.46 The Fed also announced that it would further increase its lending in the
repo market and its purchases of Treasury securities to provide liquidity. As a result of tight
market conditions for corporate bonds, firms turned to their revolving lines of credit with banks to
build up their cash reserves. The price of bank shares fell, reflecting sales by investors who
https://www.ft.com/content/06ef38c9-18d8-427e-8675-a567227397c0.
42 Chazan, Guy, David Keohane, and Martin Arnold, ―Europe‘s Policymakers Search for Answers to Virus Crisis,‖
Financial Times, March 9, 2020. https://www.ft.com/content/d46467da-61e1-11ea-b3f3-fe4680ea68b5.
43 Smith, Colby and Brendan Greeley, ―Fed Pumps Extra Liquidity Into Overnight Lending Markets,‖ Financial Times,
March 9, 2020. https://www.ft.com/content/e8c7b5f0-6200-11ea-a6cd-df28cc3c6a68.

44 O‘Brien, Fergal, ―ECB‘s Lagarde Warns of 2008-Style Crisis Unless Europe Acts,‖ Washington Post, March 11,
2020. https://www.bloomberg.com/news/articles/2020-03-11/ecb-s-lagarde-warns-of-2008-style-crisis-without-urgent-
action.
45 McAuley, James and Michael Birnbaum, ―Europe Blindsided by Trump‘s Travel Restrictions, with Many Seeing
Political Motive,‖ Washington Post, March 12, 2020. https://www.washingtonpost.com/world/europe/europe-

blindsided-by-trumps-travel-restrictions-with-many-seeing-political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-
5c5336b32760_story.html.
46 Arnold, Martin, ―ECB Enters Damage-Limitation Mode with Pledge of More Action,‖ Financial Times, March 13,
2020. https://www.ft.com/content/f1cbd4f8-650f-11ea-b3f3-fe4680ea68b5.

reportedly had grown concerned that banks would experience a rise in loan defaults.47 Despite the
various actions, the DJIA fell by nearly 10% on March 12, recording the worst one-day drop since
1987. Between February 14 and March 12, the DJIA fell by more than 8,000 points, or 28% of its
value. Credit rating agencies began reassessing corporate credit risk, including the risk of firms
that had been considered stable.48
On March 13, President Trump declared a national emergency, potentially releasing $50 billion in
disaster relief funds to state and local governments. The announcement moved financial markets
sharply higher, with the DJIA rising 10%.49 Financial markets also reportedly moved higher on
expectations the Fed would lower interest rates. House Democrats and President Trump agreed to
a $2 trillion spending package to provide paid sick leave, unemployment insurance, food stamps,
support for small businesses, and other measures.50 The EU indicated that it would relax budget
rules that restrict deficit spending by EU members. In other actions, the People‘s Bank of China
cut its reserve requirements for Chinese banks, potentially easing borrowing costs for firms and
adding $79 billion in funds to stimulate the Chinese economy; Norway‘s central bank reduced its
key interest rate; the Bank of Japan acquired billions of dollars of government securities (thereby
increasing liquidity); and the Reserve Bank of Australia injected nearly $6 billion into its
financial system.51 The Bank of Canada also lowered its overnight bank lending rate.
The Federal Reserve lowered its key interest rate to near zero on March 15, 2020, arguing that the
pandemic had ―harmed communities and disrupted economic activity in many countries,
including the United States‖ and that it was prepared to use its ―full range of tools.‖52 It also
announced an additional $700 billion in asset purchases, including Treasury securities and
mortgage-backed securities, expanded repurchase operations, activated dollar swap lines with
Canada, Japan, Europe, the UK, and Switzerland, opened its discount window to commercial
banks to ease household and business lending, and urged banks to use their capital and liquidity
buffers to support lending.53
Despite the Fed‘s actions the previous day to lower interest rates, interest rates in the U.S.
commercial paper market, where corporations raise cash by selling short-term debt, rose on
March 16, 2020, to their highest levels since the 2008-2009 financial crisis, prompting investors
47 Morris, Stephen, Laura Noonan, Henny Sender, and Olaf Storbeck, ―Banks Scramble as Companies Rush to Tap
Back-up Credit Lines,‖ Financial Times, March 12, 2020. https://www.ft.com/content/a3513a54-6486-11ea-b3f3-
fe4680ea68b5.
48 Edgecliffe-Johnson, Andrew, Peggy Hollinger, Joe Rennison, and Robert Smith, ―Will the COVID-19 Trigger a
Corporate Debt Crisis?‖ Financial Times, March 12, 2020. https://www.ft.com/content/4455735a-63bc-11ea-b3f3-

fe4680ea68b5. Sectors most exposed to debt financing issues include automotive, insurance, capital goods, utilities, oil
and gas, technology, aerospace and defense, real estate, telecoms, consumer products, metals, mining and steel,
healthcare, retail/restaurants, chemicals, packaging, transportation, media and entertainment, and forest products.
49 Fritz, Angela and Meryl Kornfield, ―President Trump Declares a National Emergency, Freeing $50 Billion in
Funding,‖ Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/COVID-19-latest-

news.
50 Werner, Erica, Mike DeBonis, Paul Kane, Jeff Stein, ―White House, House Democrats Reach Deal on COVID-19
Economic Relief Package, Pelosi Announces,‖ Washington Post, March 13, 2020. https://www.washingtonpost.com/
us-policy/2020/03/13/paid-leave-democrats-trump-deal-COVID-19/.
51 Georgiadis, Philip, Hudson Lockett, and Leo Lewis, ―European Stocks and US Futures Soar After Historic Rout,‖
Financial Times, March 13, 2020. https://www.ft.com/content/3bab76ac-64cd-11ea-a6cd-df28cc3c6a68.
52 Federal Reserve Releases FOMC Statement, Board of Governors of the Federal Reserve System, March 15, 2020.
53 Greeley, Brendan, Colby Smith, Adam Samson, Joe Rennison, Katie Martin, and Jennifer Ablan, ―Fed Cuts Rates to
Zero as Part of Sweeping Crisis Measures,‖ Financial Times, March 15, 2020. https://www.ft.com/content/a9a28bc0-
66fb-11ea-a3c9-1fe6fedcca75.

to call on the Federal Reserve to intervene.54 The DJIA dropped nearly 3,000 points, or about
13%. Most automobile manufacturers announced major declines in sales and production;55
similarly, most airlines reported they faced major cutbacks in flights and employee layoffs due to
diminished economic activity.56 Economic data from China indicated the economy would slow
markedly in the first quarter of 2020, potentially greater than that experienced during the global
financial crisis.57 The Bank of Japan announced that it would double its purchases of exchange
traded funds and the G-7 countries58 issued a joint statement promising ―a strongly coordinated
international approach,‖ although no specific actions were mentioned. The IMF issued a
statement indicating its support for additional fiscal and monetary actions by governments and
that the IMF ―stands ready to mobilize its $1 trillion lending capacity to help its membership.‖
The World Bank also promised an additional $14 billion to assist governments and companies
address the pandemic.59
Following the drop in equity market indexes the previous day, the Federal Reserve unveiled a
number of facilities on March 17, 2020, in some cases reviving actions it had not taken since the
financial crisis. It announced that it would allow the 24 primary dealers in Treasury securities to
borrow cash collateralized against some stocks, municipal debt, and higher-rated corporate bonds;
revive a facility to buy commercial paper; and provide additional funding for the overnight repo
market.60 The UK government proposed government-backed loans to support business; a three-
month moratorium on mortgage payments for homeowners; a new lending facility with the Bank
of England to provide low-cost commercial paper to support lending; and loans for businesses.
In an emergency session on March 18, the ECB announced a Pandemic Emergency Purchase
Program to acquire an additional €750 billion (over $820 billion) in bond purchases.61 The ECB
also broadened the types of assets it would accept as collateral for non-financial commercial
paper and eased collateral standards for banks.62 The Federal Reserve broadened its central bank
dollar swap lines to include Brazil, Mexico, Australia, Denmark, Norway, and Sweden.
Automobile manufacturers announced they were suspending production at an estimated 100
plants across North America, following similar plant closures in Europe.63 Major U.S. banks
54 Rennison, Joe Rennison and Colby Smith, ―Investors Call for Fed Help in ‗Frozen‘ Commercial Paper Market,‖
Financial Times, March 16, 2020. https://www.ft.com/content/34213560-677b-11ea-a3c9-1fe6fedcca75.
55 Campbell, Peter, Joe Miller, and David Keohane, ―European Car Plants Close as Industry Crisis Deepens,‖ Financial
Times, March 16, 2020. https://www.ft.com/content/dd76d42a-678b-11ea-a3c9-1fe6fedcca75.

56 Smyth, Jamie Smyth, Andrew Edgecliffe-Johnson, Peggy Hollinger, Myles McCormick, David Keohane, and
Richard Milne, ―Most Airlines Face Bankruptcy by End of May, Industry Body Warns,‖ Financial Times, March 16,
2020. https://www.ft.com/content/30a3a26e-674f-11ea-800d-da70cff6e4d3.
57 Weinland, Don and Xinning Liu, ―Chinese Economy Suffers Record Blow from COVID-19,‖ Financial Times,
March 16, 2020. https://www.ft.com/content/318ae26c-6733-11ea-800d-da70cff6e4d3.

58 The G-7 is comprised of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
59 Wheatley, Jonathan, ―Surging Dollar, Coronavirus and Oil Slump Hit Emerging Economies,‖ Financial Times,
March 18, 2020. https://www.ft.com/content/69fc6e2a-69d3-11ea-a3c9-1fe6fedcca75.

60
Politi, James, Brendan Greeley, Colby Smith, and Joe Rennison, ―Fed to Lend Against Stocks and Bonds in Bid to
Stabilize Markets,‖ Financial Times, March 17, 2020. https://www.ft.com/content/cf485398-689d-11ea-800d-
da70cff6e4d3.
61 ―ECB Announces €750 Billion Pandemic Emergency Purchase Program (PEPP),‖ European Central Bank, March
18, 2020. https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html.

62 Arnold, Martin, ―ECB to Launch €750 Billion Purchase Program in Response to Coronavirus,‖ Financial Times,
March 18, 2020. https://www.ft.com/content/5919c6fb-1f5f-315d-8353-94f04afcf340.

63 Campbell, Peter and Claire Bushey, ―Ford, General Motors and Fiat Chrysler Agree Widespread Shutdown,‖
Financial Times, March 18, 2020. https://www.ft.com/content/feae3808-6949-11ea-800d-da70cff6e4d3.

announced a moratorium on share repurchases, or stock buy-backs, denying equity markets a

major source of support and potentially amplifying market volatility.64 During the week, more
than 22 central banks in emerging economies, including Brazil, Turkey, and Vietnam, lowered
their key interest rates.
By March 19, 2020, investors were selling sovereign and other bonds as firms and other financial
institutions attempted to increase their cash holdings, although actions central banks took during
the week appeared to calm financial markets. Compared to previous financial market dislocations
in which stock market values declined while bond prices rose, stock and bond values fell at the
same time in March 2020 as investors reportedly adopted a ―sell everything‖ mentality to build
up cash reserves.65 Senate Republicans introduced the Coronavirus Aid, Relief, and Economic
Security Act to provide $2 trillion in spending to support the U.S. economy.
By the close of trading on March 20, the DJIA index had fallen by 17% from March 13. At the
same time, the dollar continued to gain in value against other major currencies and the price of oil
dropped close to $20 per barrel on March 20, as indicated in Figure 5. The Federal Reserve
announced that it would expand a facility to support the municipal bond market. Britain‘s Finance
Minister announced an ―unprecedented‖ fiscal package to pay up to 80% of an employee‘s wages
and deferring value added taxes by businesses.66 The ECB‘s Largarde justified actions by the
Bank during the week to provide liquidity by arguing that the ―coronavirus pandemic is a public
health emergency unprecedented in recent history.‖ Market indexes fell again on March 23 as the
Senate continued to debate the parameters of a new spending bill to support the economy. Oil
prices also continued to fall as oil producers appeared to be in a standoff over cuts to production.
Figure 5. Brent Crude Oil Price per Barrel in Dollars
Source: Markets Insider.
64 Henderson, Richard, ―Bank-Led Freeze on Stock Buybacks Could Spread Across US Market,‖ Financial Times,
March 18, 2020. https://www.ft.com/content/b1fa1688-68f6-11ea-a3c9-1fe6fedcca75.
65 Stubbington, Tommy and Colby Smith, ―Investment Veterans Try to Get to Grips With ‗Broken‘ Markets,‖
Financial Times, March 20, 2020. https://www.ft.com/content/97186440-6aa0-11ea-800d-da70cff6e4d3.

66 Parker, George Parker, Chris Giles, and Sebastian Payne, ―Sunak Turns on Financial Firepower to Help Workers,‖
Financial Times, March 20, 2020, https://www.ft.com/content/826d465a-6ac3-11ea-a3c9-1fe6fedcca75.

Financial markets continued to fall on March 23, 2020, as market indexes reached their lowest
point since the start of the pandemic crisis. The Federal Reserve announced a number of new
facilities to provide an unlimited expansion in bond buying programs. The measures included
additional purchases of Treasury and mortgage-backed securities; additional funding for
employers, consumers, and businesses; establishing the Primary Market Corporate Credit Facility
(PMCCF) to support issuing new bonds and loans and the Secondary Market Corporate Credit
Facility (SMCCF) to provide liquidity for outstanding corporate bonds; establishing the Term
Asset-Backed Securities Loan Facility (TALF), to support credit to consumers and businesses;
expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to provide credit to
municipalities; and expanding the Commercial Paper Funding Facility (CPFF) to facilitate the
flow of credit to municipalities.67 The OECD released a statement encouraging its members to
support ―immediate, large-scale and coordinated actions.‖ These actions included (1) more
international cooperation to address the health crisis; (2) coordinated government actions to
increase spending to support health care, individuals, and firms; (3) coordinated central bank
action to supervise and regulate financial markets; (4) and policies directed at restoring
confidence.68
Reacting to the Fed‘s announcement, the DJIA closed up 11% on March 24, marking one of the
sharpest reversals in the market index since February 2020. European markets, however, did not
follow U.S. market indexes as various indicators signaled a decline in business activity in the
Eurozone that was greater than that during the financial crisis and indicated the growing potential
for a severe economic recession.69 U.S. financial markets were buoyed on March 25 and 26 over
passage in the Congress of a $2.2 trillion economic stimulus package.
On March 27, leaders of the G-20 countries announced through a video conference they had
agreed to inject $5 trillion into the global economy and to do ―whatever it takes to overcome the
pandemic.‖ Also at the meeting, the OECD offered an updated forecast of the viral infection,
which projected that the global economy could shrink by as much as 2% a month. Nine Eurozone
countries, including France, Italy, and Spain called on the ECB to consider issuing
―coronabonds,‖ a common European debt instrument to assist Eurozone countries in fighting
COVID-19.70 The ECB announced that it was removing self-imposed limits that it had followed
in previous asset purchase programs that restricted its purchases of any one country‘s bonds.71
Japan announced that it would adopt an emergency spending package worth $238 billion, or
equivalent to 10% of the country‘s annual GDP.72 Despite the various actions, global financial
markets turned down March 27 (the DJIA dropped by 900 points) reportedly over volatility in oil
markets and concerns that the economic effects of the COVID-19 pandemic were worsening.73
67 Federal Reserve Announces Extensive New Measures to Support the Economy, Board of Governors of the Federal
Reserve System, March 23, 2020. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm.
68 Gurria, Angel, COVID-19: Joint Actions to Win the War, Organization for Economic Cooperation and Development,
March 23, 2020. https://www.oecd.org/coronavirus/#op-ed.

69 Arnold, Martin Arnold and Valentina Romei, ―Business Activity Crashes to Record Low in Eurozone,‖ Financial
Times, March 24, 2020. https://www.ft.com/content/f5ebabd4-6dad-11ea-89df-41bea055720b.

70 Dombrey, Daniel, Guy Chazan, and Jim Brunsden, ―Nine Eurozone Countries Issue Call for ‗Coronabonds,‘‖
Financial Times, March 26, 2020. https://www.ft.com/content/258308f6-6e94-11ea-89df-41bea055720b.
71 Arnold, Martin and Tommy Stubbington, ―ECB Shakes Off Limits on New €750bn Bond-Buying Plan,‖ Financial
Times, March 27, 2020. https://www.ft.com/content/d775a99e-13b2-444e-8de5-fd2ec6caf4bf.

72 Kajimoto, Tetsushi, Izumi Nakagawa, ―Japan Plans Huge Stimulus Package to Cushion Blow from Coronavirus,‖
Reuters, March 27, 2020, https://www.reuters.com/article/us-health-coronavirus-japan-stimulus/japan-plans-huge-

stimulus-package-to-cushion-blow-from-coronavirus-idUSKBN21E0UW.
73 Georgiadis, Philip, Hudson Lockett, and Leo Lewis, ―Global Stocks Falter After Two Days of Big Gains,‖ Financial

By March 30, central banks in developing countries from Poland, Columbia, South Africa, the
Philippines, Brazil, and the Czech Republic reportedly had begun adopting monetary policies
similar to that of the Federal Reserve to stimulate their economies.74 In commodity markets,
Brent crude oil prices continued to fall, reaching a low of $22.76. Strong global demand for
dollars continued to put upward pressure on the international value of the dollar. In response, the
Federal Reserve introduced a new temporary facility that would work with its swap lines to allow
central banks and international monetary authorities to enter into repurchase agreements with the
Fed.75 From mid-March to mid-April, U.S. workers‘ claims for unemployment benefits reached
over 17 million as firms faced a collapse in demand and requirements for employees to self-
quarantine caused them to begin furloughing or laying off employees. Financial markets began to
recover somewhat in early April in response to the accumulated monetary and fiscal policy
initiatives, but remained volatile as a result of uncertainty over efforts to reach an output
agreement among oil producers and the continued impact of the viral health effects.
The Federal Reserve announced on April 8 that it was establishing a facility to fund small
businesses through the Paycheck Protection Program. Japan also announced that it was preparing
to declare areas around Tokyo to be in a state of emergency and that it would adopt a $989 billion
funding package.76
On April 9, OPEC and Russia reportedly agreed to cut oil production by 10 million barrels per
day.77 On April 15, G-20 finance ministers and central bank governors announced their support
for the proposed agreement by Saudi Arabia and Russia to reduce oil production.78 They also
announced an agreement to freeze government loan payments until the end of the year to help
low-income developing countries address the pandemic and asked international financial
institutions to do likewise.79 G-7 finance ministers and central bank governors agreed to support
the G-20 proposal to suspend debt payments by developing countries.80 Eurozone finance
ministers announced a €500 billion (about $550 billion) emergency spending package to support
governments, businesses, and workers. Reportedly, the measure will provide funds to the
European Stability Mechanism, the European Investment Bank, and for unemployment
insurance.81 The IMF announced that it was doubling its emergency lending capability to $100
Times, March 27, 2020. https://www.ft.com/content/bc33c31c-f019-4ef8-85df-0014a5406ac1.

74 Wheatley, Jonathan, ―Emerging Market Central Banks Embark on Radical Stimulus Policies,‖ Financial Times,
March 30, 2020. https://www.ft.com/content/70398316-3fd5-4428-88ab-6f898ee42fd5.

75 Politi, James, Brendan Greeley, and Colby Smith, ―Fed Sets Up Scheme to Meet Booming Foreign Demand for
Dollars,‖ Financial Times, March 31, 2020. https://www.ft.com/content/6c976586-a6ea-42ec-a369-9353186c05bb.

76 Takeo, Yuko and Yoshiaki Nohara, ―Japan‘s Virus Stimulus Package to Come in Two Phases,‖ Bloomberg, April 5,
2020. https://www.bloomberg.com/news/articles/2020-04-06/japan-s-virus-stimulus-package-to-come-in-two-phases-
documents-k8nuj552.
77 Sheppard, David, Anjli Raval, Derek Brower, and Henry Foy, ―G20 Ministers Meet to Endorse OPEC-Russia Deal to
Slash Oil Production,‖ Financial Times, April 10, 2020. https://www.ft.com/content/c7a1e2e6-8c17-48d5-8c16-

edce911b5cbb.
78 Sheppard, David, Anjli Raval, Derek Brower. and Henry Foy, G20 Backs Largest Oil Supply Agreement in History,
Financial Times, April 15, 2020. https://www.ft.com/content/16ac91d8-42bf-4190-88de-f3d89b2b36f4.
79 England, Andrew, Jonathan Wheatley and James Politi, G20 Agrees Debt Relief for Low Income Nations, Financial
Times, April 15, 2020. https://www.ft.com/content/5f296d54-d29e-4e87-ae7d-95ca6c0598d5.

80 Politi, James and Jonathan Wheatley, G7 Countries Back Debt Relief For Poorest Nations, Financial Times, April
14, 2020. https://www.ft.com/content/c384ed59-1ca3-476f-9b89-eaf5cf31e42c.

81 Fleming, Sam and Mehreen Khan, ―Eurozone Countries Strike Emergency Deal on Coronavirus Rescue,‖ Financial
Times, April 9, 2020. https://www.ft.com/content/b984101a-42b8-40db-9a92-6786aec2ba5c.

billion, in response to requests from more than 90 countries for assistance.82 The Bank of England
announced that it would take the unprecedented move of temporarily directly financing UK
government emergency spending needs through monetary measures rather than through the
typical method of issuing securities to fight the effects of COVID-19.83 Secretary-General of the
United Nations Guterres declared on April 9, 2020, before the United Nations Security Council
that the pandemic poses a significant threat to the maintenance of international peace and security
and outlined eight specific risks, including the erosion of trust in public institutions, increased
risks from terrorism and bioterrorism, and worsening existing human rights abuses.84
Federal Reserve Chairman Jerome Powell, stating that the U.S. economy was deteriorating ―with
alarming speed,‖ announced on April 10 that the Fed would provide an additional $2.3 trillion in
loans, including a new financial facility to assist firms by acquiring shares in exchange traded
funds that own the debt of lower-rated, riskier firms that are among the most exposed to
deteriorating economic conditions associated with COVID-19 and low oil prices.85 On April 16,
the U.S. Labor Department reported that 5.2 million Americans filed for unemployment insurance
during the previous week, raising the total claims since mid-March to over 22 million.86
According to Chinese official statistics, the Chinese economy shrank by 6.8% on an annual basis
during the first quarter of 2020, reportedly the first such contraction in 40 years.87
Financial market indicators rose on April 17, 2020, reportedly on an upbeat sentiment that actions
taken by the Federal Reserve and other central banks would stabilize conditions in the corporate
credit market.88 The price of futures contracts for oil delivery in May 2020 for the U.S. West
Texas Intermediate (WTI) fell to $18 per barrel, the lowest it had been since 2002, reportedly
reflecting rising inventories and low global demand.89 Leaders of emerging economies in Latin
America and Africa argued that the G-20 call for suspension of interest payments fell short of
what is needed. National leaders from Columbia, Brazil, Mexico, and Chile encouraged the World
Bank, the InterAmerican Development Bank and the IMF to double their net lending to Latin
America, arguing that, ―The Covid-19 pandemic is a shock of unprecedented magnitude,
82 Politi,James, ―IMF Boosts Emergency Lending Capacity to $100bn,‖ Financial Times, April 9, 2020.
https://www.ft.com/content/e46faadc-456b-4cf8-a2fd-2017702747ab.
83 Giles, Chris and Philip Georgiadis, ―Bank of England to Directly Finance UK Government‘s Extra Spending,‖
Financial Times, April 9, 2020. https://www.ft.com/content/664c575b-0f54-44e5-ab78-2fd30ef213cb.

84 Secretary-General’s Remarks to the Security Council on the COVID-19 Pandemic [as delivered], United Nations,
April 9, 2020. https://www.un.org/sg/en/content/sg/statement/2020-04-09/secretary-generals-remarks-the-security-

council-the-covid-19-pandemic-delivered.
85 Rennison, Joe, Robin Wigglesworth, and Colby Smith, ―Federal Reserve Enters New Territory with Support for
Risky Debt,‖ Financial Times, April 10, 2020. https://www.ft.com/content/c0b78bc9-0ea8-461c-a5a2-89067ca94ea4.

Heather Long, ―Fed Chair Powell Says U.S. Economy Deteriorating ‗With Alarming Speed,‘‖ Washington Post, April
9, 2020. https://www.washingtonpost.com/business/2020/04/09/federal-reserve-unveils-over-2-trillion-new-lending-
small-businesses-city-governments-big-firms/.
86 Unemployment Insurance Weekly Claims, Department of Labor, April 16, 2020. https://www.dol.gov/ui/data.pdf.
87 Hale, Thomas, Xinning Liu, and Yuan Yang, China‘s Economy Shrinks for First Time in Four Decades, Financial
Times, April 17, 2020. https://www.ft.com/content/8f941520-67ad-471a-815a-d6ba649d22ed.

88 Smith, Colby, Myles McCormick, Tommy Stubbington, and Hudson Lockett, US Stocks Extend Rally With Central
Bank Safety Net, Financial Times, April 17, 2020. https://www.ft.com/content/5ebbc2d8-ade3-4d5c-86f5-

49b9478fe03d.
89 Sheppard, David, US Crude Tumbles to 18-year Low as Supply Overwhelms Demand, Financial Times, April 17,
2020. https://www.ft.com/content/d0a0cfc3-765c-4b55-ada7-11e0d378d406.

uncertain duration and catastrophic consequences that, if not properly addressed, could lead to
one of the most tragic episodes in the history of Latin America and the Caribbean.‖90
On April 19, 2020, the price of oil fell to its lowest level in two decades, reportedly reflecting a
significant drop in global demand for energy and rising inventories.91 The European Central Bank
(ECB) reportedly argued for the ECB to create a Eurozone ―bad bank‖ to remove billions of euros
in non-performing debts from banks‘ balance sheets to provide more capacity for Eurozone banks
at a potentially critical time when banks may see an increase in non-performing loans.92 The
World Bank confirmed that its ―pandemic bonds‖ would pay out $133 billion to the poorest
countries affected by the pandemic.93
On April 21, 2020, Agricultural Ministers of the G-20 countries released a joint statement that
supported measures to ―ensure the health, safety, welfare, and mobility of workers in agriculture
and throughout the food supply chain.‖ The joint statement also indicated that the G-20 countries
would adopt measures that are ―targeted, proportionate, transparent, and temporary, and that they
do not create unnecessary barriers to trade or disruption to global food supply chains.‖ The
statement also indicated that the G-20 would, ―guard against any unjustified restrictive measures
that could lead to excessive food price volatility in international markets and threaten the food
security and nutrition of large proportions of the world population, especially the most vulnerable
living in environments of low food security.‖94
On April 23, 2020, the House passed H.R. 266 (P.L. 116-139), the Paycheck Protection Program
and Health Care Enhancement Act, following similar actions by the Senate the previous day. The
measure will provide $484 billion for small business loans, health care providers, and COVID-19
testing. The U.S. Labor Department reported that 4.4 million Americans filed for unemployment
insurance in the previous week, raising the total that have applied to over 26 million.95 Indicators
of manufacturing and services activity in Europe dropped to their lowest level since 1990,
reflecting the impact of the pandemic on the European economy.96 The Bank of England indicated
that it would quadruple its borrowing over the second quarter of 2020, reflecting a contraction in
the UK economy, lower tax revenues, and increased financial demands to support fiscal policy
measures to fight the pandemic.97 The Saudi Presidency of the G-20 called on international
organizations on April 24, 2020, to fund an emergency response to the pandemic. The Bank of
Japan announced on April 27, 2020, that it would purchase unlimited amounts of government
90 Wheatley, Jonathan, Michael Stott, and David Pilling, Emerging Economies Call for More Financial Help After G20
Deal, Financial Times, April 17, 2020. https://www.ft.com/content/203ed8f5-6bb2-4016-80a9-dd99269bfa26.
91 Lockett, Hudson Lockett and David Sheppard, US Oil Price Plunges to 20-year Low as Coronavirus Hits Demand,
Financial Times, April 19, 2020. https://www.ft.com/content/a5292644-958d-4065-92e8-ace55d766654.

92 Arnold, Martin and Javier Espinoza, ECB Pushes for Eurozone Bad Bank to Clean up Soured Loans, Financial
Times, April 19, 2020. https://www.ft.com/content/15d17d1d-8e1b-4f84-97b4-b62e6ae8f962.

93 Gross, Anna, World Bank Pandemic Bonds to Pay $133m to Poorest Virus-hit Nations, Financial Times, April 19,
2020. https://www.ft.com/content/c8556c9f-72f7-48b4-91bf-c9e32ddab6ff.
94 G20 Extraordinary Agriculture Ministers Meeting: Statement on COVID-19, G-20, April 21, 2020. https://g20.org/
en/media/Pages/pressroom.aspx.
95 Unemployment Insurance Weekly Claims, Department of Labor, April 23, 2020. https://www.dol.gov/ui/data.pdf.
96 Arnold, Martin and Valentina Romei, European Business Activity Crashes Under Coronavirus Lockdowns,
Financial Times, April 23, 2020. https://www.ft.com/content/8520895f-3249-4a8b-b0e5-881a64e77971.

97 Giles, Chris, and Tommy Stubbington, UK Treasury to Quadruple Borrowing to £180bn Over Next Quarter,
Financial Times, April 23, 2020. https://www.ft.com/content/8886e002-c260-4daa-8b7b-509b3f7e6edb.

bonds and quadruple its purchases of corporate debt to keep interest rates low and stimulate the
Japanese economy.98
At its April 29, 2020, scheduled meeting, the U.S. Federal Open Market Committee left its main
interest rates unchanged, but reiterated its commitment to use ―its full range of tools to support
the U.S. economy.‖ The policy statement concluded that, ―The ongoing public health crisis will
weigh heavily on economic activity, employment, and inflation in the near term, and poses
considerable risks to the economic outlook over the medium term.‖99 The Federal Reserve also
announced a change in its eligibility requirements for a $500 billion lending program for
municipalities. The statement followed the release of the preliminary estimate of U.S. first quarter
GDP, which indicated that the economy had contracted by an annualized rate of 4.8%.100 Also.
The Department of Labor released its weekly data on applications for unemployment insurance,
which indicated that an additional 3.8 million people had filed for unemployment insurance
during the week, raising the total number who have applied to 30 million.101
The Federal Reserve also announced an expansion in its medium-size business loan program by
allowing firms with up to 15,000 employees or with revenues up to $5 billion to access a new
$600 billion program. In addition, the Fed lowered the minimum loan amount for small
businesses and announced a loan program to assist riskier businesses.102 At the same time, the
ECB expanded a record low-interest rate loan program for Eurozone banks to support economic
activity, while warning that the Eurozone economy could contract between 5% and 12% in 2020
as it faces, ―an economic contraction of a magnitude and speed that are unprecedented in
peacetime.‖103 The ECB also announced a new non-targeted low-interest rate pandemic
emergency longer-term refinancing operation (PELTROs) to complement its Pandemic
Emergency Refinance Operations announced in March.104 House Speaker Pelosi stated that House
Democrats were considering a $1 trillion spending bill to support state and local governments.105
In a development that seemed incongruous with the broader economic situation, between April 1,
2020, and April 30, 2020, the DJIA rose more than 3,400 points, or 16%, marking the strongest
monthly increase since 1987.106
98 Harding, Robin, Bank of Japan Steps up Coronavirus Stimulus With Bond-buying Pledge, Financial Times, April 27,
2020. https://www.ft.com/content/7ba5c507-df9e-4107-87eb-73afa2c13e91.
99 Federal Reserve Issues FOMC Statement, Board of Governors of the Federal Reserve System, April 29, 2020.
100 Gross Domestic Product, First Quarter 2020 (Advance Estimate), Bureau of Economic Analysis, April 29, 2020.
https://www.bea.gov/.
101 Unemployment Insurance Weekly Claims, Department of Labor, April 30, 2020. https://search.usa.gov/search?utf8=
%E2%9C%93&affiliate=www.dol.gov&query=UNEMPLOYMENT+INSURANCE+WEEKLY+CLAIMS.
102 Politi, James, Colby Smith and Robert Armstrong, Federal Reserve Extends $600bn Main Street Lending Program.
Financial Times, April 30, 2020. https://www.ft.com/content/46fdc853-1d7d-49af-93e8-f12e0d006fc2.

103 Introductory Statement, European Central Bank, April 29, 2020. https://www.ecb.europa.eu/press/pressconf/2020/
html/ecb.is200430~ab3058e07f.en.html.
104 Arnold, Martin and Tommy Stubbington, ECB Launches Fresh Push to Lend to Banks at Ultra-low Rates, Financial
Times, April 30, 2020. https://www.ft.com/content/cef090d0-97dc-4e75-a4b1-deebfd4afacf.

105 Werner, Erica, Pelosi Points to $1 Trillion Need for State and Local Governments in Next Coronavirus Bill, The
Washington Post, April 30, 2020. https://www.washingtonpost.com/us-policy/2020/04/30/congress-coronavirus-
economy/.
106 Henderson, Richard Henderson, Robin Wigglesworth, and Katie Martin, U.S. Stocks Close Out Best Month Since
1987 in Global Rebound, Financial Times, April 30, 2020. https://www.ft.com/content/88e57ec9-42d4-455d-a045-

293a6a54837d.

Comparing the Current Crisis and the 2008 Crisis

Sharp declines in the stock market and broader financial sector turbulence; interest rate cuts and large-scale
Federal Reserve intervention; and discussions of massive government stimulus packages have led some observers
to compare the current market reaction to that experienced a little over a decade ago. There are similarities and
important differences between the current economic crisis and the global financial crisis of 2008/2009. Foremost,
the earlier crisis was rooted in structural weakness in the U.S. financial sector. Following the collapse of the U.S.
housing bubble, it became impossible for firms to identify demand and hold inventories across many sectors
(construction, retail, etc.). This led to massive oversupply and sharp retail losses which extended to other sectors
of the U.S. economy and eventually the global economy. Moreover, financial markets across countries were linked
together by credit default swaps. As the crisis unfolded, large numbers of banks and other financial institutions
were negatively affected, raising questions about capital sufficiency and reserves. The crisis then quickly engulfed
credit-rating agencies, mortgage lending companies, and the real estate industry broadly. Market resolution came
gradually with a range of monetary and fiscal policy measures that were closely coordinated at the global level.
These were focused on putting a floor under the falling markets, stabilizing banks, and shoring up investor
confidence to get spending started again. Starting in September 2007, the Federal Reserve cut interest rates from
over 5% in September 2007 to between 0 and 0.25% before the end of the 2008. Once interest rates approached
zero, the Fed turned to other so-called ―unconventional measures,‖ including targeted assistance to financial
institutions, encouraging Congress to pass the Troubled Asset Relief Program (TARP) to prevent the collapse of
the financial sector and boost consumer spending. Other measures included swap arrangements between the
Federal Reserve and the European Central Bank and smaller central banks, and so-called ―quantitative easing‖ to
boost the money supply. On a global level, the United States and other countries tripled the resources of the IMF
(from $250 billion to $750 billion) and coordinated domestic stimulus efforts.
Unlike the 2008 crisis, the current crisis began as a supply shock. As the global economy has become more
interdependent in recent decades, most products are produced as part of a global value chain (GVC), where an
item such as a car or mobile device consists of parts manufactured all over the world, and involving multiple
border crossings before final assembly. The earliest implications of the current crisis came in January as plant
closures in China and other parts of Asia led to interruptions in the supply chain and concerns about dwindling
inventories. As the virus spread from Asia to Europe, the crisis switched from supply concerns to a broader
demand crisis as the measures being introduced to contain the spread of the virus (social distancing, travel
restrictions, cancelling sporting events, closing shops and restaurants, and mandatory quarantine measures)
prevent most forms of economic activity from occurring. Thus, unlike the 2008 crisis response, which involved
liquidity and solvency-related policy measures to get people spending again, the current crisis did not start as a
financial crisis, but could evolve into one if a recovery in economic activity is delayed. While larger firms may have
sufficient capital to wait out a crisis, many aspects of the economy (such as restaurants or retail operations)
operate on very tight margins and would likely not be able to pay employees after closures lasting more than a few
days. Many people will also need to balance child care and work during quarantine or social distancing measures.
During this type of crisis, while monetary policy measures play a part—and the Federal Reserve has once again cut
rates to near zero—they cannot compensate for the physical interaction that the global economy is dependent
upon. As a result, fiscal stimulus will likely play a relatively larger role in this crisis in order to prevent personal and
corporate bankruptcies during the peak crisis period. Efforts to coordinate U.S. and foreign economic policy
measures will also have an important role in mitigating the scale and length of any global economic downtown.
Policy Responses
In response to growing concerns over the global economic impact of the pandemic, G-7 finance
ministers and central bankers released a statement on March 3, 2020, indicating they will ―use all
appropriate policy tools‖ to sustain economic growth.107 The Finance Ministers also pledged
fiscal support to ensure health systems can sustain efforts to fight the outbreak.108 In most cases,
107 Statement of G-7 Finance Ministers and Central Bank Governors, March 3, 2020. https://home.treasury.gov/news/
press-releases/sm927. Long, Heather, ―G-7 Leaders Promise to Help Economy as COVID-19 Spreads, But They Don‘t
Announce Any New Action,‖ Washington Post, March 3, 2020. https://www.washingtonpost.com/business/2020/03/
03/economy-COVID-19-rate-cuts/.
108 Giles, et al., ―Finance Ministers Ready to Take Action.‖

however, countries have pursued their own divergent strategies, in some cases including banning
exports of medical equipment. Following the G-7 statement, the U.S. Federal Reserve (Fed)
lowered its federal funds rate by 50 basis points, or 0.5%, to a range of 1.0% to 1.25% due to
concerns about the ―evolving risks to economic activity of the COVID-19.‖109 At the time, the cut
was the largest one-time reduction in the interest rate by the Fed since the global financial crisis.
After a delayed response, other central banks have begun to follow the actions of the G-7
countries. Most central banks have lowered interest rates and acted to increase liquidity in their
financial systems through a combination of measures, including lowering capital buffers and
reserve requirements, creating temporary lending facilities for banks and businesses, and easing
loan terms. In addition, national governments have adopted various fiscal measures to sustain
economic activity. In general, these measures include making payments directly to households,
temporarily deferring tax payments, extending unemployment insurance, and increasing
guarantees and loans to businesses.
See the Appendix to this report for detailed information about the policy actions by individual
governments.110
The United States

In a sign of growing concern over strains in financial markets and economic growth, the Federal
Reserve (Fed) has taken a number of steps to promote economic and financial stability involving
the Fed‘s monetary policy and ―lender of last resort‖ roles. Some of these actions are intended to
stimulate economic activity by reducing interest rates and others are intended to provide liquidity
to financial markets so that firms have access to needed funding. In announcing its decisions, the
Fed indicated that ―[t]he COVID-19 outbreak has harmed communities and disrupted economic
activity in many countries, including the United States. Global financial conditions have also
been significantly affected.111‖ On March 31, 2020, the Trump Administration announced that it
was suspending for 90 days tariffs it had placed on imports of apparel and light trucks from
China, but not on other consumer goods and metals.112
Monetary Policy113
Forward Guidance
Forward guidance refers to Fed public communications on its future plans for short-term interest
rates, and it took many forms following the 2008 financial crisis. As monetary policy returned to
normal in recent years, forward guidance was phased out. It is being used again today. For
example, when the Fed reduced short-term rates to zero on March 15, it announced that it
109 Federal Reserve Releases FOMC Statement, March 3, 2020, https://www.federalreserve.gov/newsevents/

pressreleases/monetary20200303a.htm.
110 Stage Three Proposal, U.S. Department of the Treasury, March 17, 2020. https://www.washingtonpost.com/context/
department-of-treasury-proposal-for-COVID-19-response/6c2d2ed5-a18b-43d2-8124-28d394fa51ff/?itid=
lk_inline_manual_3.
111 Federal Reserve Issues FOMC Statement, March 15, 2020. https://www.federalreserve.gov/newsevents/
pressreleases/monetary20200315a.htm.
112 Politi, James and Aime Williams, ―Trump to Suspend Some Tariffs for 90 Days,‖ Financial Times, March 31, 2020.
https://www.ft.com/content/46add447-2048-4348-bd34-2088ad0e3bc8.
113 This section was prepared by Marc Labonte, Specialist in Macroeconomic Policy, Government and Finance
Division, CRS. CRS Insight IN11259, Federal Reserve: Recent Actions in Response to COVID-19, by Marc Labonte.

―expects to maintain this target range until it is confident that the economy has weathered recent
events and is on track to achieve its maximum employment and price stability goals.‖
Quantitative Easing
Large-scale asset purchases, popularly referred to as quantitative easing or QE, were also used
during the financial crisis. Under QE, the Fed expanded its balance sheet by purchasing
securities. Three rounds of QE from 2009 to 2014 increased the Fed‘s securities holdings by $3.7
trillion.
On March 23, the Fed announced that it would increase its purchases of Treasury securities and
mortgage-backed securities (MBS)—including commercial MBS—issued by government
agencies or government-sponsored enterprises to ―the amounts needed to support smooth market
functioning and effective transmission of monetary policy .... ‖ These would be undertaken at the
unprecedented rate of up to $125 billion daily during the week of March 23. As a result, the value
of the Fed‘s balance sheet is projected to exceed its post-financial crisis peak of $4.5 trillion. One
notable difference from previous rounds of QE is that the Fed is purchasing securities of different
maturities, so the effect likely will not be concentrated on long-term rates.
Actions to Provide Liquidity
Reserve Requirements
On March 15, the Fed announced that it was reducing reserve requirements—the amount of vault
cash or deposits at the Fed that banks must hold against deposits—to zero for the first time ever.
As the Fed noted in its announcement, because bank reserves are currently so abundant, reserve
requirements ―do not play a significant role‖ in monetary policy.
Term Repos
The Fed can temporarily provide liquidity to financial markets by lending cash through
repurchase agreements (repos) with primary dealers (i.e., large government securities dealers who
are market makers). Before the financial crisis, this was the Fed‘s routine method for targeting the
federal funds rate. Following the financial crisis, the Fed‘s large balance sheet meant that repos
were no longer needed, until they were revived in September 2019. On March 12, the Fed
announced it would offer a three-month repo of $500 billion and a one-month repo of $500
billion on a weekly basis through the end of the month in addition to the shorter-term repos it had
already been offering. These repos would be larger and longer than those offered since
September. On March 31, the Fed announced the Foreign and International Monetary Authorities
(FIMA) Repo Facility, which works like the foreign repo pool in reverse. This facility allows
foreign central banks to convert their U.S. Treasury holdings into U.S. dollars on an overnight
basis. The Fed will charge a (typically) above market interest rate of 0.25 percentage points above
the interest rate paid on bank reserves. The facility is intended to work in tandem with currency
swap lines to provide additional dollars to meet global demand and is available to a broader group
of central banks than the swap lines.
Discount Window
In its March 15 announcement, the Fed encouraged banks (insured depository institutions) to
borrow from the Fed‘s discount window to meet their liquidity needs. This is the Fed‘s traditional

tool in its ―lender of last resort‖ function. The Fed also encouraged banks to use intraday credit
available through the Fed‘s payment systems as a source of liquidity.
Foreign Central Bank Swap Lines

Both domestic and foreign commercial banks rely on short-term borrowing markets to access
U.S. dollars needed to fund their operations and meet their cash flow needs. But in an
environment of strained liquidity, only banks operating in the United States can access the
discount window. Therefore, the Fed has standing ―swap lines‖ with major foreign central banks
to provide central banks with U.S. dollar funding that they can in turn lend to private banks in
their jurisdictions. On March 15, the Fed reduced the cost of using those swap lines and on March
19 it extended swap lines to nine more central banks. On March 31, 2020, the Fed set up a new
temporary facility to work in tandem with the swap lines to provide additional dollars to meet
global demand. The new facility allows central banks and international monetary authorities to
exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can
then be made available to institutions in their jurisdictions.114
Emergency Credit Facilities for the Nonbank Financial System

In 2008, the Fed created a series of emergency credit facilities to support liquidity in the nonbank
financial system. This extended the Fed‘s traditional role as lender of last resort from the banking
system to the overall financial system for the first time since the Great Depression. To create
these facilities, the Fed relied on its emergency lending authority (Section 13(3) of the Federal
Reserve Act). To date, the Fed has created six facilities—some new, and some reviving 2008
facilities—in response to COVID-19.
 On March 17, the Fed revived the commercial paper funding facility to purchase
commercial paper, which is an important source of short-term funding for
financial firms, nonfinancial firms, and asset-backed securities (ABS).
 Like banks, primary dealers are heavily reliant on short-term lending markets in
their role as securities market makers. Unlike banks, they cannot access the
discount window. On March 17, the Fed revived the primary dealer credit facility,
which is akin to a discount window for primary dealers. Like the discount
window, it provides short-term, fully collateralized loans to primary dealers.
 On March 19, the Fed created the Money Market Mutual Fund Liquidity Facility
(MMLF), similar to a facility created during the 2008 financial crisis. The
MMLF makes loans to financial institutions to purchase assets that money
market funds are selling to meet redemptions.
 On March 23, the Fed created two facilities to support corporate bond markets—
the Primary Market Corporate Credit Facility to purchase newly issued corporate
debt and the Secondary Market Corporate Credit Facility to purchase existing
corporate debt on secondary markets.
 On March 23, the Fed revived the Term Asset-Backed Securities Loan Facility to
make nonrecourse loans to private investors to purchase ABS backed by various
nonmortgage consumer loans.
 On April 6, the Fed announced the Payroll Protection Program Lending Facility
(PPPLF) to provide credit to depository institutions (e.g., banks) making loans
114 Foradditional information about swap lines, see CRS In Focus IF11489, Federal Executive Agencies: Selected Pay
Flexibilities for COVID-19 Response, by Barbara L. Schwemle.

under the CARES Act (H.R. 748/P.L. 116-136) Payroll Protection Program.
Because banks are not required to hold capital against these loans, this facility
increases lending capacity for banks facing high demand to originate these loans.
The PPP provides low-cost loans to small businesses to pay employees. These
loans do not pose credit risk to the Fed because they are guaranteed by the Small
Business Administration.
 On April 9, the Fed announced the Main Street Lending Program (MSLP), which
purchases loans from depository institutions to businesses with up to 10,000
employees or up to $2.5 billion in revenues. The loans to businesses would defer
principal and interest repayment for one year, and the businesses would have to
make a ―reasonable effort‖ to retain employees.
 On April 9, the Fed announced the Municipal Liquidity Facility (MLF) to
purchase state and municipal debt in response to higher yields and reduced
liquidity in that market. The facility will only purchase debt of larger counties
and cities.
Many of these facilities are structured as special purpose vehicles controlled by the Fed because
of restrictions on the types of securities that the Fed can purchase. Although there were no losses
from these facilities during the financial crisis, assets of the Treasury‘s Exchange Stabilization
Fund have been pledged to backstop any losses on several of the facilities today.
Fiscal Policy
In terms of a fiscal stimulus, Congress H.R. 6074 on March 5, 2020 (P.L. 116-123), to appropriate
$8.3 billion in emergency funding to support efforts to fight COVID-19; President Trump signed
the measure on March 6, 2020. President Trump also signed on March 18, H.R. 6201 (P.L. 116-
127), the Families First COVID-19 Response Act, that provides paid sick leave and free COVID-
19 testing, expands food assistance and unemployment benefits, and requires employers to
provide additional protections for health care workers. Other countries have indicated they will
also provide assistance to workers and to some businesses. Congress also is considering other
possible measures, including contingency plans for agencies to implement offsite telework for
employees, financial assistance to the shale oil industry, a reduction in the payroll tax,115 and
extended of the tax filing deadline.116 President Trump has taken additional actions, including
 Announcing on March 11, 2020, restrictions on all travel from Europe to the
United States for 30 days, directed the Small Business Administration (SBA) to
offer low-interest loans to small businesses, and directed the Treasury
Department to defer tax payments penalty-free for affected businesses.117
 Declaring on March 13, a state of emergency that frees up disaster relief funding
to assist state and local governments to address the effects of the pandemic. The
President also announced additional testing for the virus, a website to help
115 Armus, Theo, ―Federal, State Officials Attempt to Fight Virus Through Social Distancing, Stimulus Package,‖
Washington Post, March 11, 2020. https://www.washingtonpost.com/world/2020/03/11/Covid-19-live-updates/.
116 Sevastopulo, Demetri, ―US Treasury Considers Tax Filing Extension to Ease Virus Impact,‖ Financial Times,
March 11, 2020. https://www.ft.com/content/c65a6e40-639f-11ea-b3f3-fe4680ea68b5.

117 McAuley, James, and Michael Birnbaum, ―Europe Blindsided by Trump‘s Travel Restrictions, with Many Seeing
Political Motive,‖ Washington Post, March 12, 2020. https://www.washingtonpost.com/world/europe/europe-

blindsided-by-trumps-travel-restrictions-with-many-seeing-political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-
5c5336b32760_story.html.

individuals identify symptoms, increased oil purchases for the Strategic Oil
Reserve, and a waiver on interest payments on student loans.118
 Invoking on March 18, 2020, the Defense Production Act (DPA) that gives him
the authority to require some U.S. businesses to increase production of medical
equipment and supplies that are in short supply.119
On March 25, 2020, the Senate adopted the COVID-19 Aid, Relief, and Economic Security Act
(S. 3548) to formally implement President Trump‘s proposal by providing direct payments to
taxpayers, loans and guarantees to airlines and other industries, and assistance for small
businesses, actions similar to those of various foreign governments. The House adopted the
measure as H.R. 748 on March 27, and President Trump signed the measure (P.L. 116-136) on
March 27. The law:
 Provides funding for $1,200 tax rebates to individuals, with additional
$500 payments per qualifying child. The rebate begins phasing out when incomes
exceed $75,000 (or $150,000 for joint filers).
 Assists small businesses by providing funding for, forgivable bridge loans; and
additional funding for grants and technical assistance; authorizes emergency
loans to distressed businesses, including air carriers, and suspends certain
aviation excise taxes.
 Creates a $367 billion loan program for small businesses, establish a $500 billion
lending fund for industries, cities and states, a $150 billion for state and local
stimulus funds, and $130 billion for hospitals.
 Increases unemployment insurance benefits, expand eligibility and offer workers
an additional $600 a week for four month, in addition to state unemployment
programs.120
 Establishes special rules for certain tax-favored withdrawals from retirement
plans; delays due dates for employer payroll taxes and estimated tax
payments for corporations; and revise other provisions, including those related
to losses, charitable deductions, and business interest.
 Provides additional funding for the prevention, diagnosis, and treatment of
COVID-19; limit liability for volunteer health care professionals; prioritize Food
and Drug Administration (FDA) review of certain drugs; allow emergency use of
certain diagnostic tests that are not approved by the FDA; expand health-
insurance coverage for diagnostic testing and requires coverage for preventative
services and vaccines; and revise other provisions, including those regarding the
medical supply chain, the national stockpile, the health care workforce, the
Healthy Start program, telehealth services, nutrition services, Medicare, and
Medicaid.
118 Fritz,Angela and Meryl Kornfield, ―President Trump Declares a National Emergency, Freeing $50 Billion in
Funding,‖ Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/Covid-19-latest-
news/.
119 Hellmann, Jessie, ―Trump Invokes Defense Production Act as Covid-19 Response,‖ The Hill, March 18, 2020.
https://thehill.com/policy/healthcare/488226-trump-invokes-defense-production-act-as-Covid-19-response.
120 For additional information about unemployment and sick leave provisions, see CRS Insight IN11249, H.R. 6201:
Paid Leave and Unemployment Insurance Responses to COVID-19, by Sarah A. Donovan, Katelin P. Isaacs, and Julie
M. Whittaker, and CRS In Focus IF11487, The Families First Coronavirus Response Act Leave Provisions, by Sarah
A. Donovan and Jon O. Shimabukuro.

 Temporarily suspends payments for federal student loans and revise provisions
related to campus-based aid, supplemental educational-opportunity grants,
federal work-study, subsidized loans, Pell grants, and foreign institutions.
 Authorizes the Department of the Treasury temporarily to guarantee money-
market funds.
On April 23, 2020, the House passed H.R. 266 (P.L. 116-139), the Paycheck Protection Program
and Health Care Enhancement Act, following similar actions by the Senate the previous day. The
measure will provide $484 billion for small business loans, health care providers, and COVID-19
testing. In particular, the law:
 Provides additional lending authority for certain Small Business Administration
(SBA) programs in response to COVID-19 increases the authority for (1) the
Paycheck Protection Program, under which the SBA may guarantee certain loans
to small businesses during the COVID-19 pandemic; and (2) advances on
emergency economic injury disaster loans made in response to COVID-19. The
division also expands eligibility for such disaster loans and advances to include
agricultural enterprises.
 Provides $100 billion in FY2020 supplemental appropriations to HHS for the
Public Health and Social Services Emergency Fund, including $75 billion to
reimburse health care providers for health care related expenses or lost revenues
that are attributable to the coronavirus outbreak; and $25 billion for expenses to
research, develop, validate, manufacture, purchase, administer, and expand
capacity for COVID-19 tests to effectively monitor and suppress COVID-19.
 Allocates specified portions of the $25 billion for COVID-19 testing to states,
localities, territories, and tribes; the Centers for Diseases Control and Prevention;
the National Institutes of Health; the Biomedical Advanced Research and
Development Authority; the Food and Drug Administration; community health
centers; rural health clinics; and testing for the uninsured.
For additional information about the impact of COVID-19 on the U.S. economy see CRS Insight
IN11235, COVID-19: Potential Economic Effects.121
Europe
To date, European countries have not had the kind of synchronized policy response they
developed during the 2008-2009 global financial crisis. Instead, they have used a combination of
fiscal policies and bond buying by the ECB. Individual countries have adopted quarantines and
required business closures, travel and border restrictions, tax holidays for businesses, extensions
of certain payments and loan guarantees, and subsidies for workers and businesses. The economic
effects of the pandemic reportedly are having a significant impact on business activity in Europe,
with some indexes falling farther then they had during the height of the financial crisis and others
indicating that Europe may well experience a deep economic recession in 2020.122 France,
Germany, Italy, Spain, and the UK reported steep drops in industrial activity in March 2020. EU
countries have issued travel warnings, banning all but essential travel across borders, raising
concerns that even much-needed medical supplies could stall at borders affected by traffic
121 CRSInsight IN11235, COVID-19: Potential Economic Effects, by Marc Labonte.
122 Arnold,
Martin and Valentina Romei, ―Business Activity Crashes to Record Low in Eurozone,‖ Financial Times,
March 24, 2020. https://www.ft.com/content/f5ebabd4-6dad-11ea-89df-41bea055720b.

backups.123 The travel bans and border closures reportedly are causing shortages of farm laborers
in Germany, the UK, and Spain, which has caused growers to attempt to recruit students and
workers laid off because of the pandemic.124
The European Commission announced that it was relaxing rules on government debt to allow
countries more flexibility in using fiscal policies. The European Central Bank (ECB) announced
that it was ready to take ―appropriate and targeted measures,‖ if needed. France, Italy, Spain and
six other Eurozone countries have argued for creating a ―coronabond,‖ a joint common European
debt instrument. Similar attempts to create a common Eurozone-wide debt instrument have been
opposed by Germany and the Netherland, among other Eurozone members.125 With interest rates
already low, however, it indicated that it would expand its program of providing loans to EU
banks, or buying debt from EU firms, and possibly lowering its deposit rate further into negative
territory in an attempt to shore up the Euro‘s exchange rate.126 ECB President-designate Christine
Lagarde called on EU leaders to take more urgent action to avoid the spread of COVID-19
triggering a serious economic slowdown. The European Commission indicated that it was
creating a $30 billion investment fund to address COVID-19 issues.127 In other actions:
 On March 12, 2020, the ECB decided to: (1) expand its longer-term refinance
operations (LTRO) to provide low-cost loans to Eurozone banks to increase bank
liquidity; (2) extend targeted longer-term refinance operations (TLTRO) to
provide loans at below-market rates to businesses, especially small and medium-
sized businesses, directly affected by COVID-19; (3) provide an additional €120
billion (about $130 billion) for the Bank‘s asset purchase program to provide
liquidity to firms that was in addition to €20 billion a month it previously had
committed to purchasing.128
 On March 13, 2020, financial market regulators in the UK, Italy, and Spain
intervened in stock and bond markets to stabilize prices after historic swings in
indexes on March 12, 2020.129 In addition, the ECB announced that it would do
more to assist financial markets in distress, including altering self-imposed rules
on purchases of sovereign debt.130
123 Birnbaum, Michael, ―Europe Is Closing Borders amid Covid-19 Outbreak. They May be Hard to Reopen,‖
Washington Post, March 17, 2020. https://www.washingtonpost.com/world/europe/europe-closing-borders-Covid-19/
2020/03/17/131a6f56-67c8-11ea-b199-3a9799c54512_story.html.
124 Evans, Judith Evans, Emiko Terazono, and Leila Abboud, ―Farmers Warn over Food Supply with Harvest Workers
Shut Out,‖ Financial Times, March 27, 2020. https://www.ft.com/content/e27a9395-db47-4e7b-b054-3ec6ba4cbba3.

125 Dombey, Daniel Dombey, Guy Chazan, and Jim Brunsden, ―Nine Eurozone Countries Issue Call for
‗Coronabonds,‘‖ Financial Times, March 26, 2020. https://www.ft.com/content/258308f6-6e94-11ea-89df-

41bea055720b.
126 ―US Fed‘s Covid-19 Rate Cut Is First Move in a Dance with Markets,‖ Financial Times, March 4, 2020.
https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4. Giles, Chris, Martin Arnold, Sam Jones, and

Jamie Smyth, “Finance Ministers ‗Ready to Take Action‘ on Covid-19,‖ Financial Times, March 3, 2020.
https://www.ft.com/content/b86f7d92-5d38-11ea-b0ab-339c2307bcd4.
127 Arnold,Martin and Guy Chazan, ―Christine Lagarde Calls on EU Leaders to Ramp up Covid-19 Response,‖
Financial Times, March 11, 2020. https://www.ft.com/content/44eac1f2-6386-11ea-a6cd-df28cc3c6a68.
128 Monetary Policy Decisions, The European Central Bank, March 12, 2020. https://www.ecb.europa.eu/press/pr/date/
2020/html/ecb.mp200312~8d3aec3ff2.en.htm.
129 Stafford,Philip and Adam Samson, ―European Regulators Intervene in Bid to Stabilize Stock and Bond Prices,‖
Financial Times, March 13, 2020. https://www.ft.com/content/77f57d4c-6509-11ea-a6cd-df28cc3c6a68.
130 Arnold, Martin, ―ECB Enters Damage-Limitation Mode with Pledge of More Action,‖ Financial Times, March 13,
2020. https://www.ft.com/content/f1cbd4f8-650f-11ea-b3f3-fe4680ea68b5.

 Germany‘s Economic Minister announced on March 13, 2020, that Germany

would provide unlimited loans to businesses experiencing negative economic
activity (initially providing $555 billion), tax breaks for businesses,131 and export
credits and guarantees.132
 On March 18, the ECB indicated that it would: create a €750 billion (about $800
billion) Pandemic Emergency Purchase Program to purchase public and private
securities; expand the securities it will purchase to include nonfinancial
commercial paper; and ease some collateral standards.133 In announcing the
program, President-designate Lagarde indicated that the ECB would, ―do
everything necessary.‖ In creating the program, the ECB removed or significantly
loosened almost all constraints that applied to previous asset-purchase programs,
including a self-imposed limit of buying no more one-third of any one country‘s
eligible bonds, a move that should benefit Italy.
 The ECB also indicated that it would make available up to €3 trillion in liquidity
through refinancing operations.134 Britain ($400 billion) and France ($50 billion)
also announced plans to increase spending to blunt the economic effects of the
virus. Recent forecasts indicate that the economic effect of COVID-19 could
push the Eurozone into an economic recession in 2020.135
 On March 23, 2020, Germany announced that it would adopt a €750 billion (over
$800 billion) package in economic stimulus funding.
 On April 15, Eurozone finance ministers announced a €500 billion (about $550
billion) emergency spending package to support governments, businesses, and
workers and will provide funds to the European Stability Mechanism, the
European Investment Bank, and for unemployment insurance.136
The United Kingdom

The Bank of England announced on March 11, 2020, that it would adopt a package of four
measures to deal with any economic disruptions associated with COVID-19. The measures
include an unscheduled cut in the benchmark interest rate by 50 basis points (0.5%) to a historic
low of 0.25%; the reintroduction of the Term Funding Scheme for Small and Medium-sized
Enterprises (TFSME) that provides banks with over $110 billion for loans at low interest rates; a
131 Loveday, Morris and Louisa Beck, ―Germany Announces ‗Bazooka‘ Economic Plan to Mitigate Covid-19 Hit,‖
Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/Covid-19-latest-news/.
132 Arnold, Martin, Guy Chazan, Victor Mallet, Miles Johnson, and Daniel Dombey, ―How European Economies Are
Trying to Mitigate the Covid-19 Shock,‖ Financial Times, March 17, 2020. https://www.ft.com/content/26af5520-
6793-11ea-800d-da70cff6e4d3.
133 ECB Announces €759 Billion Pandemic Emergency Purchase Program, the European Central Bank, March 18,
2020. https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html.
134 Lagarde, Christine, ―The ECB Will Do Everything Necessary to Counter the Virus,‖ Financial Times, March 20,
2020. https://www.ft.com/content/281d600c-69f8-11ea-a6ac-9122541af204.
135 ―Lagarde to Confront Covid-19 Crisis at ECB Policy Meeting,‖ Financial Times, March 8, 2020.
https://www.ft.com/content/79a280c6-5fb5-11ea-b0ab-339c2307bcd4.
136 Fleming, Sam and Mehreen Khan, ―Eurozone Countries Strike Emergency Deal on Coronavirus Rescue,‖ Financial
Times, April 9, 2020. https://www.ft.com/content/b984101a-42b8-40db-9a92-6786aec2ba5c.

lowering of banks‘ countercyclical capital buffer to zero percent, which is estimated to support
over $200 billion of bank lending to businesses; and a freeze in banks‘ dividend payments.137
UK Chancellor of the Exchequer Rishi Sunak proposed a national budget on March 11, 2020, that
includes nearly $3.5 billion in fiscal spending to counter adverse economic effects of the
pandemic and includes an increase in statutory sick leave by about $2.5 billion in funds to small
and medium businesses to provide up to 14 days of sick leave for affected employees. The plan
also proposes to give affected workers up to 80% of their salary, or up to £2,500 a month (about
$2,800) if they are laid off. Some estimates indicate that UK spending to support its economy
could rise to about $60 billion this year.138 Prime Minister Johnson also announced that all pubs,
cafés, restaurants, theatres, cinemas, nightclubs, gyms and leisure centers would be closed.139 Part
of the fiscal spending package includes open-ended funding for the National Health Service
(NHS), $6 billion in emergency funds to the NHS, $600 million hardship fund to assist vulnerable
people, and tax cuts and tax holidays for small businesses in certain affected sectors.140 The Bank
of England also reduced its main interest rate and supplied the financial markets with additional
liquidity.141
On April 23, 2020, the Bank of England indicated it would quadruple its borrowing over the
second quarter of 2020, reflecting a contraction in the UK economy, lower tax revenues, and
increased financial demands to support fiscal policy measures.142
Japan
The Bank of Japan, with already-low interest rates, injected $4.6 billion in liquidity into Japanese
banks to provide short-term loans for purchases of corporate bonds and commercial paper and
twice that amount into exchange traded funds to aid Japanese businesses. The Japanese
government also pledged to provide wage subsidies for parents forced to take time off due to
school closures.143 On March 24, 2020, Japan announced that the Summer Olympics set to take
place in Tokyo would be postponed by a year, delaying an expected boost to the Japanese
economy that was expected from the event. Japan reportedly is considering an emergency fiscal
package of about $515 billion, roughly equivalent to 10% of Japan‘s annual gross domestic
product (GDP). On April 27, 2020, the Bank of Japan announced it would purchase unlimited
amounts of government bonds and quadruple its purchases of corporate debt to keep interest rates
low and stimulate the Japanese economy.144
137 Romei, Valentina, ―Covid-19 Fallout: Bank of England Launches 4 Key Measures,‖ Financial Times.
https://www.ft.com/content/4e60c08e-6380-11ea-b3f3-fe4680ea68b5.
138 Parker, George Parker, Chris Giles, and Sebastian Payne, ―Sunak Turns on Financial Firepower to Help Workers,‖
Financial Times, March 20, 2020. https://www.ft.com/content/826d465a-6ac3-11ea-a3c9-1fe6fedcca75.

139 Ibid.
140 Payne, Sebastian and Chris Giles, ―Budget 2020: Sunak Unveils £30bn Stimulus to Counter UK Covid-19 Shock,‖
Financial Times. https://www.ft.com/content/f7b27264-6384-11ea-a6cd-df28cc3c6a68.

141
Johnson, Miles, Chris Giles, Martin Arnold, and James Politi, ―Italy‘s PM Urges Brussels to Unleash €500bn
Rescue Fund,‖ Financial Times, March 18, 2020. https://www.ft.com/content/5b8205ac-6a06-11ea-800d-
da70cff6e4d3.
142 Giles, Chris, and Tommy Stubbington, UK Treasury to Quadruple Borrowing to £180bn Over Next Quarter,
Financial Times, April 23, 2020. https://www.ft.com/content/8886e002-c260-4daa-8b7b-509b3f7e6edb.

143 Harding, Robin and Hudson Lockett, ―BoJ Spurs Asia Markets Rebound with Vow to Fight Covid-19,‖ Financial
Times, March 2, 2020. https://www.ft.com/content/9fa91e06-5c3b-11ea-b0ab-339c2307bcd4.

144 Harding, Robin, Bank of Japan Steps up Coronavirus Stimulus With Bond-buying Pledge, Financial Times, April
27, 2020. https://www.ft.com/content/7ba5c507-df9e-4107-87eb-73afa2c13e91.

China
According to a recent CRS InFocus,145 China‘s economic growth could go negative in the first
quarter of 2020 and fall below 5% for the year, with more serious effects if the outbreak
continues. In early February, China‘s central bank pumped $57 billion into the banking system,
capped banks‘ interest rates on loans for major firms, and extended deadlines for banks to curb
shadow lending. The central bank has been setting the reference rate for China‘s currency
stronger than its official close rate to keep it stable. On March 13, 2020, The People‘s Bank of
China announced that it would provide $78.8 billion in funding, primarily to small businesses, by
reducing bank‘s reserve requirements.146
The International Monetary Fund (IMF) is providing funding to poor and emerging market
economies that are short on financial resources.147 If the economic effects of the virus persist,
countries may need to be proactive in coordinating fiscal and monetary policy responses, similar
to actions taken by of the G-20 following the 2008-2009 global financial crisis.
Multilateral Response
International Monetary Fund
The IMF initially announced that it was making available about $50 billion for the global crisis
response.148 Following a G20 ministerial call on March 23, IMF Managing Director Kristalina
Georgieva announced that the Fund is ready to deploy all of its $1 trillion capacity. The Fund is
also exploring options to quickly raise financing foremost of which is finalizing agreement on a
2019 agreement to renew and augment the IMF‘s New Arrangements to Borrow (NAB), a credit
line that augments IMF quota resources. Other options to increase IMF resources include a new
allocation of special drawing rights (SDRs), sale of IMF gold holdings, selling IMF bonds,
developing an expanded network of central bank swap arrangements centered at the IMF.
For low-income countries, the IMF is providing rapid-disbursing emergency financing of up to
$10 billion (50% of quota of eligible members) that can be accessed without a full-fledged IMF
program. Other IMF members can access emergency financing through the Fund‘s Rapid
Financing Instrument (RFI). This facility could provide about $40 billion for emerging markets
facing fiscal pressures from COVID-19. Separate from these resources, the IMF has a
Catastrophe Containment and Relief Trust (CCRT), which provides eligible countries with up-
front grants for relief on IMF debt service falling due. The CCRT was used during the 2014 Ebola
outbreak, but is now underfunded, according to IMF Managing Director Georgieva with just over
$200 million available against possible needs of over $1 billion.149 On March 11, 2020, the
145 For additional information about China‘s response, see CRS In Focus IF11434, COVID-19: U.S.-China Economic
Considerations, by Karen M. Sutter and Michael D. Sutherland.
146 Weinland, Don, ―China‘s Central Bank Launches $79bn Stimulus for Virus-Hit Companies,‖ Financial Times,
March 13, 2020. https://www.ft.com/content/deb56f86-6515-11ea-b3f3-fe4680ea68b5.

147 Politi, James, ―IMF Sets Aside $50bn for Covid-19-Hit Countries,‖ Financial Times, March 4, 2020,
https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4.
148 International Monetary Fund, IMF Makes Available $50 Billion to Help Address Coronaviris, March 4, 2020.
149 International Monetary Fund, United Kingdom Boosts IMF’s Catastrophe Relief Fund with £150 Million, March 11,
2020.

United Kingdom announced that it will contribute £150 million (about $170 million) to the
CCRT. To date, the United States has not contributed to the CCRT.150
World Bank and Regional Development Banks

The World Bank announced on March 2 that it is making up to $12 billion in financing ($8 billion
of which is new) immediately available to help impacted developing countries.151 This support
comprises up to $2.7 billion in new financing from the International Bank for Reconstruction and
Development (IBRD), the World Bank‘s market-rate lending facility for middle-income
developing countries, and $1.3 billion from the International Development Association (IDA), the
World Bank‘s concessional facility for low-income countries. In addition, the Bank is
reprioritizing $2 billion of the Bank‘s existing portfolio. The International Finance Corporation
(IFC), the Bank‘s private-sector lending arm is making available up to $6 billion. According to
the Bank, support will cover a wide range of activities, including strengthening health services
and primary health care, bolstering disease monitoring and reporting, training front line health
workers, encouraging community engagement to maintain public trust, and improving access to
treatment for the poorest patients.
Several years ago, the World Bank introduced pandemic bonds, a novel form of catastrophe
financing.152 The Bank sold two classes of bonds worth $320 million in a program designed to
provide financing to developing countries facing an acute epidemic crisis if certain triggers are
met. Once these conditions are met, bondholders no longer receive interest payments on their
investments, the money is no longer repaid in full, and funds are used to support the particular
crisis. In the case of COVID-19, for the bonds to be triggered, the epidemic must be continuing to
grow 12 weeks after the first day of the outbreak. Critics have raised a range of concerns about
the bonds, arguing that the terms are too restrictive and that the length of time needs to be
shortened before triggering the bonds.153 Others stress that the proposal remains valid – shifting
the cost of pandemic assistance from governments to the private sector, especially in light of the
failure of past efforts to rally donor support to establish multilateral pandemic funds.
The Asian Development Bank (ADB) has approved a total of $4 million to help developing
countries in Asia and the Pacific.154 Of the total, $2 million is for improving the immediate
response capacity in Cambodia, China, Laos, Myanmar, Thailand, and Vietnam; $2 million will
be available to all ADB developing member countries in updating and implementing their
pandemic response plans. The ADB also provided a private sector loan of up to $18.6 million to
Wuhan-based Jointown Pharmaceutical Group Co. Ltd. to enhance the distribution and supply of
essential medicines and protective equipment.
150 Ibid.
151 World Bank, World Bank Group Announces Up to $12 Billion Immediate Support for COVID-19 Country Response,
March 3, 2019.
152 Anna Gross, ―Critics Take Aim at ‗Failure‘ of Bond Designed to Fight Disease,‖ Financial Times, March 10, 2020,
https://www.ft.com/content/a6239e12-5ec7-11ea-b0ab-339c2307bcd4.
153 Ibid.
154 Asian Development Bank, ADB Approves Another $2 Million to Help Asia and the Pacific Tackle Covid-19,
February 26, 2020.

International Economic Cooperation

On March 16, 2020, the leaders of the G-7 countries (Canada, France, Germany, Italy, Japan, the
United Kingdom, and the United States) held an emergency summit by teleconference to discuss
and coordinate their policy responses to the economic fallout from the global spread of COVID-
19. In the joint statement released by the G-7 leaders after the emergency teleconference summit,
the leaders stressed they are committed to doing ―whatever is necessary to ensure a strong global
response through closer cooperation and enhanced cooperation of efforts.‖155 The countries
pledged to coordinate research efforts, increase the availability of medical equipment; mobilize
―the full range‖ of policy instruments, including monetary and fiscal measures as well as targeted
actions, to support workers, companies, and sectors most affected by the spread of COVID-19;
task the finance ministers to coordinate on a weekly basis, and direct the IMF and the World Bank
Group, as well as other international organizations, to support countries worldwide as part of a
coordinated global response.156
Saudi Arabia, the 2020 chair of the G-20, called an emergency G-20 summit on March 25 to
discuss a response to the pandemic.157 The G-20 is a broader group of economies, including the
G-7 countries and several major emerging markets.158 During the global financial crisis, world
leaders decided that henceforth the G-20 would be the premiere forum for international economic
cooperation. Some analysts have been surprised that the G-7 has been in front of the G-20 in
responding to COVID-19, while other analysts have questioned whether the larger size and
diversity of economies in the G-20 can make coordination more difficult.159
Analysts are hopeful that the recent G-7 summit, and a G-20 summit, will mark a shift towards
greater international cooperation at the highest (leader) levels in combatting the economic fallout
from the spread of COVID-19.160 An emergency meeting of G-7 finance ministers on March 3,
2020, fell short of the aggressive and concrete coordinated action that investors and economists
had been hoping for, and U.S. and European stock markets fell after the meeting.161 More
generally, governments have been divided over the appropriate response and in some cases have
acted unilaterally, particularly when closing borders and imposing export restrictions on medical
equipment and medicine. Some experts argue that a large, early, and coordinated response is
needed to address the economic fallout from COVID-19, but several concerns loom about the G-
20‘s ability to deliver.162 Their concerns focus on the Trump Administration‘s prioritization of an
―America First‖ foreign policy over one committed to multilateralism; the 2020 chair of the G-20,
Saudi Arabia, is embroiled in its own domestic political issues and oil price war; and U.S.-China
tensions make G-20 consensus more difficult.
155 White House, G-7 Leaders‘ Statement, March 16, 2020, https://www.whitehouse.gov/briefings-statements/g7-
leaders-statement/.
156 Ibid
157 ―Spain Says Saudi Arabia to Cal G-20 to Meet on Covid-19 in Coming Days,‖ Reuters, March 16, 2020.
158 The G-20 includes the G-7 countries plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia,
Saudi Arabia, South Africa, South Korea, Turkey, and the European Union (EU).
159 For more information about the G-20, see CRS Report R40977, The G-20 and International Economic Cooperation:
Background and Implications for Congress, by Rebecca M. Nelson.

160 See for example, Jennifer Rankin, ―EU Leaders Divided on How to Protect Economies after Covid-19,‖ The
Guardian, March 14, 2020.

161 Jack Ewing and Jeanna Smialek, ―Economic Powers Vow to Fight Crisis,‖ New York Times, March 3, 2020.
162 Matthew Goodman and Mark Sobel, ―Time to Pull the G-20 Fire Bell,‖ Center for Strategic and International
Studies, March 18, 2020.

Meanwhile, international organizations including the IMF and multilateral development banks,
have tried to forge ahead with economic support given their current resources. Additionally, the
Financial Stability Board (FSB), an international body including the United States that monitors
the global financial system and makes regulations to ensure stability, released a statement on
March 20, 2020, that its members are actively cooperating to maintain financial stability during
market stress related to COVID-19.163 The FSB is encouraging governments to use flexibility
within existing international standards to provide continued access to funding for market
participants and for businesses and households facing temporary difficulties from COVID-19,
while noting that many FSB members have already taken action to release available capital and
liquidity buffers.
Estimated Effects on Developed and Major

Economies
Among most developed and major developing economies, economic growth at the beginning of
2020 was tepid, but still was estimated to be positive. Countries highly dependent on trade—
Canada, Germany, Italy, Japan, Mexico, and South Korea—and commodity exporters are now
projected to be the most negatively affected by the slowdown in economic activity associated
with the virus.164 In addition, travel bans and quarantines are taking a heavy economic toll on a
broad range of countries. The OECD notes that production declines in China have spillover
effects around the world given China‘s role in producing computers, electronics, pharmaceuticals
and transport equipment, and as a primary source of demand for many commodities.165 Across
Asia, some forecasters argue that recent data indicate that Japan, South Korea, Thailand, the
Philippines, Indonesia, Malaysia, and Vietnam could experience an economic recession in
2020.166
In early January 2020, before the COVID-19 outbreak, economic growth in developing
economies as a whole was projected by the International Monetary Fund (IMF) to be slightly
more positive than in 2019. This outlook was based on progress being made in U.S.-China trade
talks that were expected to roll back some tariffs and an increase in India‘s rate of growth.
Growth rates in Latin America and the Middle East were also projected to be positive in 2020.167
These projections likely will be revised downward due to the slowdown in global trade associated
with COVID-19, lower energy and commodity prices, an increase in the foreign exchange value
of the dollar, and other secondary effects that could curtail growth. Commodity exporting
countries, in particular, likely will experience a greater slowdown in growth than forecasted in
earlier projections as a result of a slowdown on trade with China and lower commodity prices.
163 ―FSBCoordinates Financial Sector Work to Buttress the Economy in Response to Covid-19,‖ Financial Stability
Board, Press Release 6/2020, March 20, 2020.
164 OECD Interim Economic Assessment, p. 7.
165 Ibid.,
p. 5.
166 Arnold, Martin Arnold and Valentina Romei, ―European Factory Output Plummets as Covid-19 Shutdown Bites,‖
Financial Times, April 1, 2020. https://www.ft.com/content/8646c0ee-8fba-4e4c-a047-cf445ff41cf6.
167 Tentative Stabilization, Sluggish Recovery? World Economic Outlook Update, January 20, 2020, The International
Monetary Fund. https://www.imf.org/en/Publications/WEO/Issues/2020/01/20/weo-update-january2020.

Emerging Markets
The combined impact of COVID-19, an increase in the value of the dollar, and an oil price war
between Saudi Arabia and Russia are hitting developing and emerging economies hard. Not all of
these countries have the resources or policy flexibility to respond effectively. According to figures
compiled by the Institute for International Finance (IIF), cumulative capital outflows from
developing countries since January 2020 are double the level experienced during the 2008/2009
crisis and substantially higher than recent market events (Figure 6).168
Figure 6. Capital Flows to Emerging Markets in Global Shocks
Source: Original graphic and data from International Institute for Finance using data from Haver. Edited by CRS
for clarification.
The impact of the price war and lower energy demand associated with a COVID-19-related
economic slowdown is especially hard on oil and gas exporters, some of whose currencies are at
record lows (Figure 7). Oil importers, such as South Africa and Turkey, have also been hit hard;
South Africa‘s rand has fallen 18%169 against the dollar since the beginning of 2020 and the
Turkish lira has lost 8.5%.170 Some economists are concerned that the depreciation in currencies
could lead to rising rates of inflation by pushing up the prices of imports and negatively economic
growth rates in 2020.171
168 These include concerns in 2015 over China‘s renminbi devaluation and the so-called ―Taper Tantrum‖ in 2013 when
the Federal Reserve announced that it would slow down the pace of its post global financial crisis asset purchases.
Sergei Lanau and Jonathan Fortun, ―Economic Views—The COVID-19 Shock to EM Flows,‖ Institute for
International Finance, March 17, 2020.
169 Paul Wallace, ―Here‘s How the Oil Crash is Hitting Emerging Market Currencies,‖ Bloomberg, March 17, 2020,
https://www.bloomberg.com/news/articles/2020-03-17/here-s-how-the-oil-crash-is-hitting-emerging-market-currencies.
170 Nevzat Devranoglu, ―Turkish Lira Hits Weakest Level Since 2018 Currency Crisis Due to Covid-19,‖ Nasdaq,
March 17, 2020, https://www.nasdaq.com/articles/turkish-lira-hits-weakest-level-since-2018-currency-crisis-due-to-

Covid-19-2020-03-17.
171 Johnson, Steve, ―Currency Sell-Off Threatens Emerging Market Response to Covid-19,‖ Financial Times, March 3,
2020. https://www.ft.com/content/94ad9d70-2ca2-4490-96fb-5b01b509ed37.

Depending on individual levels of foreign exchange reserves and the duration of the capital flow
slowdown, some countries may have sufficient buffers to weather the slowdown, while others
will likely need to make some form of current account adjustment (reduce spending, raise taxes,
etc.). Several countries, such as Iran and Venezuela, have already asked the IMF for financial
assistance and others are likely to follow.172 (Venezuela‘s request was quickly rebuffed due to
disagreement among the IMF membership over who is recognized as Venezuela‘s legitimate
leader: Nicolás Maduro or Juan Guaidó.173)
Figure 7. Depreciation Against the Dollar Since January 1, 2020
Source: Created by CRS. Data from Bloomberg.
International Economic Cooperation

Initial efforts at coordinating the economic response to the COVID-19 pandemic across countries
have been uneven. Governments are divided over the appropriate response and in some cases
have acted unilaterally, particularly when closing borders and imposing export restrictions on
medical equipment and medicine. An emergency meeting of G-7 (Canada, France, Germany,
Italy, Japan, the United Kingdom, and the United States) finance ministers on March 3, 2020, fell
short of the aggressive and concrete coordinated action that investors and economists had been
hoping for, and U.S. and European stock markets fell sharply after the meeting.174 However, on
March 16, 2020, the leaders of the G-7 countries held an emergency summit by teleconference to
discuss and coordinate their policy responses to the economic fallout from the global spread of
COVID-19. In the joint statement released by the G-7 leaders after the emergency teleconference
summit, the leaders stressed they are committed to doing ―whatever is necessary to ensure a
strong global response through closer cooperation and enhanced cooperation of efforts.‖175 The
172 ―COVID-19-Hit Iran Asks IMF for Aid amid US Sanctions,‖ Deutsche Walle, March 13, 2020,
https://www.dw.com/en/covid-19-hit-iran-asks-imf-for-aid-amid-us-sanctions/a-52763114. Iran is currently under U.S.
sanctions, which include, among other things, prohibitions on the ability of the United States to vote in favor of lending
IMF or World Bank assistance to Iran. The United States, however, cannot unilaterally block lending to a particular
country. Approving an IMF or World Bank loan requires a majority of the total voting power and the U.S. voting
power is 16.5% of the total voting power at the IMF and 15.4% at the World Bank. Iran has not borrowed from the IMF
since 1962, but did borrow from the World Bank between 2003 and 2005 over U.S. opposition.
173 Joshua Goodman, ―IMF Rejects Maduro‘s Bid for Emergency Loan to Fight Virus,‖ StarTribune,
http://www.startribune.com/venezuela-seeks-emergency-5-billion-imf-loan-to-fight-virus/568868442/.
174 Jack Ewing and Jeanna Smialek, ―Economic Powers Vow to Fight Crisis,‖ New York Times, March 3, 2020.
175 White House, G-7 Leaders‘ Statement, March 16, 2020, https://www.whitehouse.gov/briefings-statements/g7-

countries pledged to coordinate research efforts, increase the availability of medical equipment;
mobilize ―the full range‖ of policy instruments, including monetary and fiscal measures, as well
as targeted actions to support workers, companies, and sectors most affected by the spread of
COVID-19; task the finance ministers to coordinate on a weekly basis, and direct the IMF and the
World Bank Group, as well as other international organizations, to support countries worldwide
as part of a coordinated global response.176 G-7 coordination has not been without problems,
however, including disagreement among G-7 foreign affairs ministers about how to refer to the
virus (coronavirus or the ―Wuhan virus‖) and concerns about collaboration on vaccine research.177
The G-20, which has a broader membership of major advanced and emerging-market economies
representing 85% of world GDP, was slower to respond to the pandemic.178 Even though G-20
coordination is widely viewed as critical in the response to the global financial crisis of 2008-
2009, several factors may have complicated G-20 coordination in the current context: the Trump
Administration‘s prioritization of an ―America First‖ foreign policy over one committed to
multilateralism; the 2020 chair of the G-20, Saudi Arabia, is embroiled in its own domestic
political issues and oil price war; and U.S.-China tensions make G-20 consensus more difficult.179
The G-20 held a summit by teleconference on March 26, 2020, but the resulting communique was
criticized for failing to include concrete action items beyond what national governments were
already doing.180 However, G-20 coordination appears to be gaining momentum, most notably
with the G-20 agreement on debt relief for low-income countries (see ―Looming Debt Crises and
Debt Relief Efforts‖).
Meanwhile, international organizations including the IMF and multilateral development banks,
have tried to forge ahead with economic support given their current resources. Additionally, the
Financial Stability Board (FSB), an international body including the United States that monitors
the global financial system and makes regulations to ensure stability, released a statement on
March 20, 2020, that its members are actively cooperating to maintain financial stability during
market stress related to COVID-19.181 The FSB is encouraging governments to use flexibility
within existing international standards to provide continued access to funding for market
participants and for businesses and households facing temporary difficulties from COVID-19,
while noting that many FSB members have already taken action to release available capital and
liquidity buffers.
leaders-statement/.
176 Ibid
177 ―Pompeo, G-7 Foreign Ministers Spar over ‗Wuhan Virus‘,‖ Politico, March 25, 2020; Katrin Bennhold and David
E. Sanger, ―U.S. Offered ‗Large Sum‘ to German Company for Access to Coronavirus Vaccine Research, German
Officials Say,‖ New York Times, March 15, 2020.
178 The G-20 includes the G-7 countries plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia,
Saudi Arabia, South Africa, South Korea, Turkey, and the European Union (EU).
179 Matthew Goodman and Mark Sobel, ―Time to Pull the G-20 Fire Bell,‖ Center for Strategic and International
Studies, March 18, 2020.

180 Matthew Goodman, Stephanie Segal, and Mark Sobel, ―Assessing the G20 Virtual Summit,‖ Center for Strategic
and International Studies, March 27, 2020.

181 ―FSB Coordinates Financial Sector Work to Buttress the Economy in Response to Covid-19,‖ Financial Stability
Board, Press Release 6/2020, March 20, 2020.

Looming Debt Crises and Debt Relief Efforts

COVID-19 could trigger a wave of defaults around the world.182 In Q3 2019—before the
outbreak of COVID-19—global debt levels reached an all-time high of nearly $253 trillion, about
320% of global GDP.183 About 70% of global debt is held by advanced economies and about 30%
is held by emerging markets. Globally, most debt is held by nonfinancial corporations (29%),
governments (27%) and financial corporations (24%), followed by households (19%). Debt in
emerging markets has nearly doubled since 2010, primarily driven by borrowing from state-
owned enterprises.
High debt levels make borrowers vulnerable to shocks that disrupt revenue and inflows of new
financing. The disruption in economic activity associated with COVID-19 is a wide-scale
exogenous shock that will make it significantly more difficult for many private borrowers
(corporations and households) and public borrowers (governments) around the world to repay
their debts. COVID-19 has hit the revenue of corporations in a range of industries: factories are
ceasing production, brick-and-mortar retail stores and restaurants are closing, commodity prices
have plunged (Bloomberg commodity price index—a basket of oil, metals, and food prices—has
dropped 27% since the start of the year and is now at its lowest level since 1986), and overseas
and in some cases domestic travel is being curtailed.184
Households are facing a rapid increase in unemployment and, in many developing countries, a
decline in remittances. With fewer resources, corporations and households may default on their
debts, absent government intervention. These defaults will result in a decline in bank assets,
making it difficult for banks to extend new loans during the crisis or, more severely, creating
solvency problems for banks. Meanwhile, many governments are dramatically increasing
spending to combat the pandemic, and are likely to face sharp reductions in revenue, putting
pressure on public finances and raising the likelihood of sovereign (government) defaults. Debt
dynamics are particularly problematic in emerging economies, where debt obligations
denominated in foreign currencies (usually U.S. dollars). Many emerging market currencies have
depreciated since the outbreak of the pandemic, raising the value of their debts in terms of local
currency.
Governments will face difficult choices if there is a widespread wave of defaults. Most
governments have signaled a commitment to or already implemented policies to support those
economically impacted by the pandemic. These governments face decisions about the type of
assistance to provide (loans versus direct payments), the amount of assistance to provide, how to
allocate rescue funds, and what conditions if any to attach to funds. Governments have
undertaken extraordinary fiscal and monetary measures to combat the crisis. However,
developing countries that are constrained by limited financial resources and where health systems
could quickly become overloaded are particularly vulnerable.
In terms of defaults by governments (sovereign defaults), emergency assistance is generally
provided by the IMF, and sometimes paired with additional rescue funds from other governments
on a bilateral basis. The IMF and other potential donor countries will need to consider whether
the IMF has adequate resources to respond to the crisis, how to allocate funding if the demand for
funding exceeds the amount available, what conditions should be attached to rescue funding, and
182 John Plender, ―The Seeds of the Next Debt Crisis,‖ Financial Times, March 4, 2020.
183 Emre Tiftik, Khadija Mahmood, Jadranka Poljak, and Sonja Gibbs, ―Global Debt Monitor: Sustainability Matters,‖
Institute for International Finance, January 13, 2020.This includes debt held by governments, financial institutions,
nonfinancial institutions, and households.
184 ―Covid-19 Worsens Debt Crisis in Poor Countries,‖ Jubilee Debt Campaign, March 22, 2020.

whether IMF programs should be paired with a restructuring of the government‘s debt (―burden
sharing‖ with private investors).
International efforts are underway to help the most vulnerable developing countries grapple with
debt pressures. In mid-April 2020, the IMF tapped its Catastrophe Containment and Relief Trust
(CRRT), funded by donor countries, to provide grants to cover the debt payments of 25 poor and
vulnerable countries to the IMF for six months. The IMF hopes that additional donor
contributions will allow this debt service relief to be extended for two years. Additionally, the G-
20 finance ministers agreed to suspend debt service payments for the world‘s poorest countries
through the end of 2020. The Institute for International Economics, which represents 450 banks,
hedge funds, and other global financial funds, also announced that private creditors will join the
debt relief effort on a voluntary basis. This debt standstill will free up more than $20 billion for
these countries to spend on improving their health systems and fighting the pandemic.185 Private
sector commitments were critical for official creditors, so that developing countries could redirect
funds to improving health systems rather than repaying private creditors.
Other Affected Sectors

Public concerns over the spread of the virus have led to self-quarantines, reductions in airline and
cruise liner travel, the closing of such institutions as the Louvre, and the rescheduling of theatrical
releases of movies, including the sequel in the iconic James Bond series (titled, ―No Time to
Die‖).186 School closures are affecting 1.5 billion children worldwide, challenging parental leave
policies.187 Other countries are limiting the size of public gatherings.
Some businesses are considering new approaches to managing their workforces and work
methods. These techniques build on, or in some places replace, such standard techniques as self-
quarantines and travel bans. Some firms are adopting an open-leave policy to ensure employees
receive sick pay if they are, or suspect they are, infected. Other firms are adopting paid sick leave
policies to encourage sick employees to stay home and are adopting remote working policies.188
Microsoft and Amazon have instructed all of their Seattle-based employees to work from home
until the end of March 2020.189
The drop in business and tourist travel is causing a sharp drop in scheduled airline flights by as
much as 10%; airlines are estimating they could lose $113 billion in 2020 (an estimate that could
prove optimistic given the Trump Administration‘s announced restrictions on flights from Europe
to the United States and the growing list of countries that are similarly restricting flights),190 while
185 Davide Barbuscia, Marwa Rashad, and Andrea Shalal, ―G20 Countries Agree Debt Freeze for World‘s Poorest
Countries,‖ Reuters, April 15, 2020
186 Rosenberg, Alyssa, ―Covid-19 Shut Down Mona Lisa and James Bond. We Can‘t Let it Isolate Us,‖ Washington
Post, March 4, 2020. https://www.washingtonpost.com/opinions/2020/03/04/Covid-19-shut-down-mona-lisa-james-

bond-we-cant-let-it-isolate-us/.
187 Taylor, Adam, Teo Armus, Rick Noak, ―Covid-19 Turmoil Widens as U.S. Death Toll Mounts; Xi Cancels Japan
Trip,‖ Washington Post, March 5, 2020; Strauss, Valerie, ―1.5 Billion Children Around Globe Affected by School
Closure. What Countries Are Doing to Keep Kids Learning During Pandemic,‖ Washington Post, March 27, 2020.
https://www.washingtonpost.com/education/2020/03/26/nearly-14-billion-children-around-globe-are-out-school-heres-
what-countries-are-doing-keep-kids-learning-during-pandemic/.
188 Hill, Andrew and Emma Jacobs, ―Covid-19 May Create Lasting Workplace Change,‖ Financial Times, February 27,
2020. https://www.ft.com/content/5801a710-597c-11ea-abe5-8e03987b7b20.
189 Armus, Teo, ―Live Updates: Covid-19 Turmoil Widens as U.S. Death Toll Mounts; Xi Cancels Japan Trip,‖
Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/Covid-19-live-updates/.

190 Taylor, Adam, ―Airlines Could Suffer up to $113 Billion in Lost Revenue Due to Covid-19 Crisis, IATA Says,‖

airports in Europe estimate they could lose $4.3 billion in revenue due to fewer flights.191 Industry
experts estimate that many airlines will be in bankruptcy by May 2020 under current conditions
as a result of travel restrictions imposed by a growing number of countries.192 The loss of Chinese
tourists is another economic blow to countries in Asia and elsewhere that have benefitted from the
growing market for Chinese tourists and the stimulus such tourism has provided.
The decline in industrial activity has reduced demand for energy products such as crude oil,
causing prices to drop sharply, which negatively affects energy producers, renewable energy
producers, and electric vehicle manufacturers, but generally is positive for consumers and
businesses. Saudi Arabia is pushing other OPEC (Organization of the Petroleum Exporting
Countries) members collectively to reduce output by 1.5 million barrels a day to raise market
prices. U.S. shale oil producers, who are not represented by OPEC, support the move to raise
prices.193 An unwillingness by Russia to agree to output reductions added to other downward
pressures on oil prices and caused Saudi Arabia to engage in a price war with Russia that has
driven oil prices below $25 per barrel at times, half the estimated $50 per barrel break-even point
for most oil producing countries.194 Rising oil supplies and falling demand are combining to
create an estimated surplus of 25 million barrels a day and could soon overwhelm storage
capacity and challenge the viability of U.S. shale oil production.195 In 2019, low energy prices
combined with high debt levels reportedly caused U.S. energy producers to reduce their spending
on capital equipment, reduced their profits and, in some cases, led to bankruptcies.196 Reportedly,
in late 2019 and early 2020, bond and equity investors, as well as banks, reduced their lending to
shale oil producers and other energy producers that typically use oil and gas reserves as
collateral.197
Disruptions to industrial activity in China reportedly are causing delays in shipments of
computers, cell phones, toys, and medical equipment.198 Factory output in China, the United
States, Japan, and South Korea all declined in the first months of 2020.199 Reduced Chinese
agricultural exports, including to Japan, are leading to shortages in some commodities. In
Washington Post, March 5, 2020. https://www.washingtonpost.com/world/2020/03/05/Covid-19-live-updates/.

191 ―Airlines Slash Flights to Cut Costs as Covid-19 Hits Travel Demand,‖ Financial Times. https://www.ft.com/
content/c28b5790-62c6-11ea-a6cd-df28cc3c6a68.
192 Smyth, Jamie Smyth, Andrew Edgecliffe-Johnson, Peggy Hollinger, Myles McCormick, David Keohane, and
Richard Milne, ―Most Airlines Face Bankruptcy by End of May, Industry Body Warns,‖ Financial Times, March 16,
2020.
193 Brower, Derek, ―Cash-Strapped US Shale Producers Pray for OPEC Aid,‖ Financial Times, March 3, 2020.
https://www.ft.com/content/9161e62c-5cb1-11ea-b0ab-339c2307bcd4.
194 Strauss, Delphine, ―Why There Are No Winners from the Oil Price Plunge This Time,‖ Financial Times, March 10,
2020. https://www.ft.com/content/da2b0700-622c-11ea-b3f3-fe4680ea68b5; Mufson, Steve and Will Englund, ―Oil

Price War Threatens Widespread Collateral Damage,‖ Washington Post, March 10, 2020.
https://www.washingtonpost.com/climate-environment/oil-price-war-threatens-widespread-collateral-damage/2020/03/
09/3e42c9e2-6207-11ea-acca-80c22bbee96f_story.html.
195 Sheppard, David and Derek Brower, ―U.S. Crude Oil Price Drops Below $20,‖ Financial Times, March 29, 2020.
https://www.ft.com/content/bc938195-82d3-43eb-b031-740028451382.
196 ―Texas Oil Groups: Panhandling Ahead,‖ The Financial Times, January 20, 2020.
197 Ibid.
198 Hille, Kathrin, Alistair Gray, and Patrick McGee, ―Covid-19 Delays PC and Smartphone Shipments for Weeks,‖
Financial Times, March3, 2020. https://www.ft.com/content/72742872-5c31-11ea-b0ab-339c2307bcd4.

199 Newmyer, Tory, ―The Finance 202: Stocks Stage Major Comeback, but Manufacturing Report Points to Continued
Covid-19 Pain,‖ Washington Post, March 3, 2020. https://www.washingtonpost.com/news/powerpost/paloma/the-

finance-202/2020/03/03/the-finance-202-stocks-stage-major-comeback-but-manufacturing-report-points-to-continued-
Covid-19-pain/5e5d84a6602ff10d49ac081f/?itid=hp_hp-cards_hp-card-politics%3Ahomepage%2Fcard-ans.

addition, numerous auto producers are facing shortages in parts and other supplies that have been
sourced in China. Reductions in international trade have also affected ocean freight prices. Some
freight companies argue that they could be forced to shutter if prices do not rebound quickly.200
Disruptions in the movements of goods and people reportedly are causing some companies to
reassess how international they want their supply chains to be.201 According to some estimates,
nearly every member of the Fortune 1000 is being affected by disruptions in production in
China.202
Conclusions
The quickly evolving nature of the COVID-19 crisis creates a number of issues that make it
difficult to estimate the full cost to global economic activity. These issues include, but are not
limited to:
 How long will the crisis last?
 How many workers will be affected both temporarily and permanently?
 How many countries will be infected and how much economic activity will be
reduced?
 When will the economic effects peak?
 How much economic activity will be lost as a result of the viral outbreak?
 What are the most effective monetary and fiscal policies at the national and
global level to address the crisis?
 What temporary and permanent effects will the crisis have on how businesses
organize their work forces?
 Many of the public health measures taken by countries such as Italy, Taiwan,
South Korea, Hong Kong, and China have sharply impacted their economies
(with plant closures, travel restrictions, and so forth). How are the tradeoffs
between public health and the economic impact of policies to contain the spread
of the virus being weighed?
200 Lynch,David J., ―Economic Fallout from China‘s Covid-19 Mounts Around the World,‖ Washington Post,
February 13, 2020. https://www.washingtonpost.com/business/economy/economic-fallout-from-chinas-Covid-19-
mounts-across-the-globe/2020/02/13/7bb69a12-4e8c-11ea-9b5c-eac5b16dafaa_story.html?itid=lk_inline_manual_12
201 Ibid.
202 Ibid.

Appendix. Table A-1. Select Measures Implemented

and Announced by Major Economies in Response to
COVID-19
United States U.S. Federal Reserve
March 3: Cut the target range for the federal funds rate by 0.5 percentage point.
March 12: Expanded reverse repo operations, adding $1.5 trillion of liquidity to the
banking system.
March 15: Cut the target range for the federal funds rate by a full percentage point
to a range of 0.00% to 0.25% and restarted quantitative easing with the purchase of at
least $500 billion in Treasury securities and $200 billion in mortgage-backed
securities.
March 16: Increased reverse repo operations by another $500 billion.
March 17: U.S. Treasury Secretary Mnuchin approved the Federal Reserve’s creation
of a ―Commercial Paper Funding Facility," (CPFF) through March 17, 2021, which will
allows the Fed to create a corporation which can purchase commercial paper, short-
term, unsecured loans made by businesses for everyday expenses and authorized up
to $10 billion from the Treasury to help cover loan losses incurred under this
program.
March 17: Relaunched the Primary Dealer Credit Facility (PDCF) for at least six
months. Starting March 20, the PDCF will offer short-term loans to banks secured by
collateral such as municipal bonds or investment-grade corporate debt.
March 18: Launched the Money Market Mutual Fund Liquidity Facility (MMLF)
through the end of September, a new program to lend money to banks so they can
purchase assets from money market funds. Treasury is offering up to $10 billion to
cover loan losses the Fed incurs from the program.
March 23: Announced a series of measures designed to stabilize markets, enhance
liquidity and stimulate growth. The measures included the roll out of 2 new facilities,
the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan
issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide
liquidity for outstanding corporate bonds. The FOMC removed its caps on planned
QE purchases and will now purchase Treasuries and agency mortgage-backed
securities ―in the amounts needed to support smooth market functioning and
effective transmission of monetary policy to broader financial conditions and the
economy.‖
U.S. Congress
March 5: Passed, and the President signed, a bill providing $8.3 billion in emergency
funding for federal agencies to respond to the COVID-19 outbreak (H.R. 6074:
COVID-19 Preparedness and Response Supplemental Appropriations Act 2020).
March 13: The House of Representatives passed a COVID-19 response package
(H.R. 6201; P.L. 116-127, Families First COVID-19 Response Act); measure was
signed by President Trump on March 18, 2020. The measure appropriates about $100
billion and includes tax credits for employers offering paid sick leave and increases to
unemployment benefits and food assistance.
March 19: The Senate introduced the COVID-19 Aid, Relief, and Economic Security
Act (S. 3548) to provide $2.0 trillion in assistance to businesses and workers.
March 27: Passed, and the President signed, the COVID-19 Aid, Relief, and
Economic Security Act (CARES Act, H.R. 748, P.L. 116-136), a $2.1 trillion fiscal
stimulus package. It includes $454 billion in loans for businesses, $349 billion in loans
for small businesses, $300 billion for direct payments of $1,200 each for lower- and

middle-income individual taxpayers (and $500 for each child), $250 billion for
unemployment insurance, and $221 billion in tax deferrals, among other measures.
March 30: Some Members of the House of Representatives announced they had
begun work on a fourth COVID-19 bill targeting a number of issues, including short
supplies of medical equipment and protective gear to enhance worker protections,
infrastructure needs, and additional payments to individuals.
Trump Administration
March 13: President Trump declared a state of emergency, allowing the Federal
Government to distribute up to $50 billion in aid to states, cities, and territories.
March 17: The Internal Revenue Service postponed the April 15 tax-payment
deadline for 90 days and will waive interest and penalties. (The extension and waiver
is available only to individuals and corporations that owe $1 million or $10 million or
less, respectively.)
March 17: Administration officials begin negotiations with Members of Congress on
a third stimulus package.
March 31: President Trump calls for $2 trillion infrastructure spending, possibly as
part of fourth COVID-19 stimulus bill.
Albania The Bank of Albania
March 25: Cut its benchmark interest rate to a record-low 0.5% and its one-day
lending rate to 0.9% on to help lending in the economy affected by the COVID-19
outbreak. It also announced that it would inject unlimited liquidity into the banking
sector, ensure the normal functioning of the electronic payments system, and that,
together with the government, it had agreed to postpone until the end of May all loan
repayments by businesses and individuals facing difficulties due to the outbreak.
Government of Albania
March 20: Passed measures totaling $370 million in its budget to soften the impact
from the COVID-19 crisis, including $25 million for the health sector; guarantees
worth $100 million to companies unable to pay their employees; and $65 million to
help the needy, small businesses, and those unable to work because of stay-at-home
orders. It also announced that it would write off penalties on delayed electricity bill
payments worth some $150 million, postpone taxes on company profits, and cut the
wages of government ministers and lawmakers by half for the duration of the crisis.
Argentina Central Bank of Argentina
March 19: Indicated that it would lower reserve requirements for banks that
extended special credit lines to small and medium-sized enterprises at a maximum
annual interest rate of 24% in a bid to offset the impact of COVID-19.
Government of Argentina
March 19: Announced a fiscal stimulus package of 700 billion pesos ($11.3 billion) to
mitigate the impact of the COVID-19 and support the economy. The main measures
include providing credit to productive activities (350 billion pesos), increasing public
investments (100 billion pesos), and waiving payroll taxes for firms affected by the
COVID-19.
Armenia March 17: The Central Bank of Armenia cut its key refinancing rate by 25 basis
points to 5.25% from 5.5% due to the effects of the COVID-19 outbreak on the
economy.
Australia Reserve Bank of Australia
March 3: Cut its benchmark interest rate by 25 basis points to 0.5% due to the
significant effect of the COVID-19 outbreak on the Australian economy.
March 19: Cut its cash rate by 25 basis points to 0.25% and and introduced a series
of measures: (1) targeting the 3-year government bond yield at 0.25% via purchases in

the secondary market, (2) providing a three-year term funding facility to authorized
deposit-taking institutions worth at least AU$90 billion at a fixed rate of 0.25%,
aiming to support credit to small and medium-sized enterprises, (3) fixing the
exchange settle balances at the central bank at 10 basis points. It will also continue to
provide liquidity by conducting one-month and three-month repo operations until
further notice. Longer-term repo operations of six-month maturity or longer would
be undertaken at least weekly. The central bank also set out forward guidance, saying
that it will not increase the cash rate until progress is made towards full employment
and confident that inflation is sustainably within its target band.
March 19: Through its daily money market operation, it has injected cash into the
banking system (through repurchasing agreements), aiming to ease liquidity
constraints in the stressed bond market: AU$12.7 billion (March 19), AU$10.7 billion
(March 18), AU$8.8 (March 17), AU$5.9 billion (March 16), and AU$8.8 (March 13).
Government of Australia
March 12: Announced a AU$17.6 billion ($11.4 billion) stimulus package that
includes support for business investment, cash flow assistance for small and medium
sized business and employees, and household stimulus payments.
March 16: The Australian Securities and Investments Commission ordered large
equity market participants to reduce their number of executed trades by 25% from
the levels executed on March 13, 2020, until further notice.
March 19: Announced that the Australian Office of Financial Management (AOFM)
will be provided with an investment capacity of $15 billion to enable smaller lenders
to continue supporting Australian consumers and small businesses. (AOFM will be
able to purchase residential mortgage backed securities and invest in a range of other
asset backed securities and warehouse facilities over the next 12 months.)
March 22: Announced an additional AU$66.4 billion ($38.5 billion) fiscal package,
which extends income support measures for existing welfare and newly unemployed
workers, and boosted previously announced measures for businesses such as cash
flow and wage subsidies. The government is also expected to give local businesses
AU$100,000 if the company has a turnover of less than AU$50 million each year and
underwrite 50% of up AU$40 billion in loans offered by local lenders to small and
medium sized companies.
March 30: Unveiled an economic package of AU$130 billion ($79.85 billion) to
subsidize the wages of an estimated 6 million people, marking a third tranche of
stimulus designed to limit the fallout of the COVID-19 pandemic on the country’s
economy. The ―job keeper‖ allowance, which would bring the country’s COVID-19-
related stimulus so far to A$320 billion (about 15% of Australia’s gross domestic
product), will provide eligible companies with AU$1,500 every fortnight for six
months for each employee. Any company that lost 30% of its revenue can apply for
the funds.
Austria Government of Austria
March 14: Set up an initial 4 billion euro ($4.4 billion) ―corona crisis fund‖ to cover,
among other things, benefits for affected workers, as well as bridge loans and credit
guarantees to shore up businesses’ liquidity.
March 18: Announced that it will spend up to 38 billion euros ($42 billion) to secure
jobs and keep companies afloat, and it will provide another 9 billion euros in
guarantees and warranties, 15 billion euros in emergency aid, and 10 billion euros in
tax deferrals.
Bosnia and March 17: The prime minister met with the IMF Resident Representative in Bosnia
Herzegovina to request assistance from the IMF. The IMF indicated that it may extend a 165
million euros ($181 million) loan to Bosnia under a Rapid Financing Instrument (RFI)
to finance the increasing costs sustained by the country’s health system in combating
COVID-19.

Brazil Central Bank of Brazil

March 18: Cut its benchmark interest rate by 50 basis points to 3.75% to cushion
the economic blow of the COVID-19 pandemic. It also sold $830 million in two
rounds of spot foreign exchange intervention and announced a repurchase program
for dollar-denominated sovereign bonds held by Brazilian banks, which will be carried
out in conjunction with the Treasury.
March 23: Announced that it planned to inject 1.2 trillion reais ($233.81 billion) into
the country’s financial system to counteract the effects of the COVID-19 outbreak,
with more than half that amount comprising loans to banks. Under the program,
lenders will be able to package their loan portfolios into long-term deposits to be
acquired by the central bank in a move aimed at freeing up 670 billion reais for fresh
loans. It also (1) cut long-term reserve requirements to 17% from 25%, freeing up 68
billion reais currently in compulsory deposits with the central bank to banks, (2)
announced measures allowing small and mid-sized lenders to issue up to 2 billion
reais in special long-term bonds guaranteed by a privately held deposit insurance fund,
limited to an amount equivalent to its shareholders’ equity, and (3) will extend loans
backed by corporate bonds to financial institutions between March 23 and April 30 to
add liquidity to their investment funds.
Government of Brazil
March 16: Announced a fiscal stimulus package of 147.1 billion reais ($28.6 billion)
to mitigate the impact of the COVID-19 and boost the economy. It does not contain
new money, but is a range of measures that aim to protect the most vulnerable
population through social assistance payments (83.4 billion reais), support domestic
companies and defer business taxes (59.4 billion reais), and increase investments in
healthcare to combat the COVID-19 (4.5 billion reais). The government also
announced a 3.1 billion reais boost to the ―Bolsa Família‖ assistance for some of
Brazil’s poorest families.
March 16: The National Monetary Council (CMN) approved the measures that will
allow banks to (1) increase loans and offer better terms to firms and households over
the next six months and (2) extend certain loan maturities for the next six months. It
also lowered capital requirements for banks.
April 1: Announced that it will cut the IOF financial tax for 90 days. It will be
temporary and cost 7 billion reais. It will also extend the deadline for submitting the
2019 base year net income report to June 30 from April 30 and allow companies to
postpone payment of certain tax contributions for two months and reduce wages by
up to 70% (or the minimum wage) for three months, among other measures.
Bulgaria Government of Bulgaria
March 30: Announced it will spend more than 1 billion levs ($566 million) to pay
part of workers’ salaries in companies whose operations have been hit by the
COVID-19 crisis, part of part of an overall 4.5 billion-lev package.
March 31: Announced plans to raise the ceiling on new debt it can raise to 10 billion
levs due to the COVID-19 pandemic.
Cambodia Government of Cambodia
March 5: Announced that it would allocate $30 million to finance Cambodia’s
COVID-19 screening and monitoring efforts.
March 10: Allocated between $800 million to $2 billion to address the economic
impacts of the novel COVID-19 outbreak.
Canada Bank of Canada
March 4: Lowered its target for the overnight rate by 50 basis points to 1.25%
(setting the bank rate to 1.5% and the deposit rate to 1%).
March 12: Announced that it will broaden the scope of the current Government of
Canada bond buyback program and temporarily add new Term Repo operations.

March 13: Lowered its benchmark overnight rate to 1.25% from 1.75% in response
to the epidemic.
March 13: Announced its intention to launch the Bankers’ Acceptance Purchase
Facility (BAPF), starting the week of March 23, 2020, in an effort to support the
continuous functioning of financial markets; it will conduct secondary market
purchases of one-month Bankers’ Acceptances issued and guaranteed by any
Canadian bank and of sufficiently high quality. BAPF operations will be conducted
weekly with the purchase amount and reserve rate being adjusted to reflect market
conditions. (For the first operation, the Bank of Canada will purchase up to $10
billion of one-month Bankers’ Acceptances with a reserve rate of the overnight index
swap rate plus 20 basis points.)
March 16: Announced that it will broaden eligible collateral for its term repo facility
and increase purchases of mortgage-backed securities (Canada Mortgage Bonds).
March 27: Cut its overnight interest rate by 50 basis points to 0.25%, its lowest level
since June 2010 and the third cut in March, to support an economy hit hard by the
outbreak of COVID-19. It also announced that it would begin purchases of CA$5
billion per week of Government of Canada securities in the secondary market.
Canadian Government
March 6: Announced an investment of CA$27 million to fund COVID-19 research
and accelerate the development, testing, and implementation of measures to deal
with the COVID-19 outbreak.
March 11: Unveiled CA$1 billion ($750 million) in funding for vaccine research and
health measures.
March 13: Established a Business Credit Availability Program (BCAP) to support
financing in the private sector through the Business Development Bank of Canada
(BDC) and Export Development Canada (EDC); it will allow BDC and EDC to
provide more than $10 billion of additional support to businesses.
March 13: The Office of the Superintendent of Financial Institutions (OSFI) lowered
the Domestic Stability Buffer requirement for domestic systemically important banks
by 1.25% of risk weighted assets; it will increase the lending capacity of Canada’s large
banks and support the supply of credit to the economy by more than CA$300 billion.
March 25: Almost doubled the value of an aid package previously announced to help
people and businesses deal with losses from the COVID-19 outbreak, from CA$27
billion to CA$52 billion ($36.6 billion). It will give people affected by the outbreak
CA$2,000 a month, delay student loan repayments, and defer tax payments, among
other measures to boost the economy.
Chile Central Bank of Chile
March 16: Cut its benchmark rate by 75 basis points to 1% and announced measures
to inject liquidity, including allocating $4 billion to purchase inflation-linked bank
bonds and providing additional credit to banks.
March 31: Cut its benchmark interest rate by 50 basis points to 0.50% amid the
COVID-19 pandemic.
Government of Chile
March 19: Announced a stimulus package of $11.75 bn to mitigate the negative
economic impact of the outbreak of COVID-19 and civil unrest. The measures
include extending unemployment insurance to those who are sick or unable to work
from home, delaying tax payments for small businesses, a cash bonus for
approximately 2 million workers who lack formal employment, and emergency funds
for municipalities.
China People’s Bank of China (PBOC)
February 3: Expanded reverse repo operations by $174 billion; added another $71
billion on February 4.

February 16: Cut the one-year medium-term lending facility rate by 10 basis points.
February 20: Cut the one-year and five-year prime rates by 10 and 5 basis points,
respectively.
March 13: Lowered bank reserve requirements, freeing up about $79 billion to be
loaned out.
March 30: Lowered the interest rate on reverse repurchase agreements to 2.20%
from 2.40%, as authorities stepped up easing measures to relieve pressure on the
economy that has been hit hard by the epidemic.
PRC Government
February: Asked banks to extend the terms of business loans and commercial
landlords to reduce rents.
February 24: The Asian Infrastructure Investment Bank (AIIB) contributed $1
million in medical equipment to help China control the spread of COVID-19.
February 27: Announced a number of tax relief measures to tackle COVID-19
disruption, including a temporary reduction its value-added tax (VAT) and the
elimination of VAT on medical, catering, accommodation, hairdressing, and laundry
services as well as on masks and protective clothing.
March: Earmarked $15.9 billion to fight the epidemic.
March 21: Announced that it would cut fees on a large scale to stimulate private-
sector investment and also accelerate the development of ―new infrastructure‖ to
help spur the economy.
March 19: Reportedly is considering a fiscal stimulus package worth trillions of yuan
to revive the economy amid the COVID-19 pandemic. The ramped-up spending will
aim to spur infrastructure investment, backed by as much as 2.8 trillion yuan ($394
billion) of local government special bonds.
March 27: The Communist Party’s Politburo announced that it would step up
macroeconomic policy changes and pursue more proactive fiscal policy. It called for
expanding the budget deficit, issuing more local and national bonds, guiding interest
rates lower, delaying loan repayments, reducing supply-chain bottlenecks and
boosting consumption.
Colombia Central Bank of Colombia
March 18: Announced a $400 million dollar to peso swap to take place on March
19, and that it would increase the resources available to financial institutions and ease
rules on which institutions can have access to funds.
March 27: Cut its benchmark interest rate by 50 basis points to 3.75% in an effort to
boost economic growth amid fall-out from COVID-19.
Government of Colombia
March 18: Announced that it has 14.8 trillion pesos ($3.65 billion) to spend on
emergency measures to ease the economic fallout from COVID-19, but it will not
take on additional debt to finance the efforts (12.1 trillion pesos will come from the
country’s savings programs). It will initially spend 1 trillion pesos on the healthcare
system and 500 billion pesos on additional payments to social welfare programs for
families, young people and the elderly, accelerate a plan to return value added tax to
the neediest Colombians from April, and make 48 trillion pesos available to give
credit guarantees to small and medium-sized businesses and households.
Congo-Kinshasa March 24: The Central Bank of the Congo cut its base interest rate to 7.5% from
(Democratic Republic 9.0% in order to cushion the economic impact of the COVID-19 outbreak. It will also
of the Congo) cut mandatory reserve requirements and provide liquidity to banks.
Cyprus Government of Cyprus

March 15: Unveiled a 700 million euro support package for companies and workers
to deal with the impact of the spread of COVID-19, which includes a temporary VAT

reduction, support for individuals and companies affected, additional paid sick leave,
and 100 million euro for the public health sector.
March 23: Announced that it is revising the economic package announced on March
15. It will amount to at least 1.5 billion euro and include direct support, deferred
government income in the form of payment suspension of direct and indirect taxes
and other fees, as well as government guarantees (which would not incur a fiscal
impact unless they materialize).
Czech Republic Czech National Bank
March 16: The Czech National Bank lowered its main two-week repo rate by 50
basis points to 1.75%, reversing its February rate hike to combat the hit from the
virus outbreak. It also raised the number of repo operations that provide liquidity to
banks to three times a week from once, noting that bids would be met with zero
spread to the repo rate.
March 17: Revised the countercyclical capital buffer for exposures located in the
Czech Republic to 1.75 %.
March 26: Cut its main two-week repo rate by 75 basis points to 1.00% and
announced that it was ready to cut interest rates further if needed.
Government of the Czech Republic

March 9: Adopted a number of economic measures, which will include providing 100
billion CZK ($3.9 billion) in direct support and 900 billion CZK ($34.8 billion) in
indirect in the form of guarantees to maintain the employment rate, paying out
(through the respective employers) 60% of the average contribution base to
employees affected by the quarantine, supporting employers who continue, despite
their businesses being shut down, to pay out 100% of the salary to affected
employees by covering 80% of salary costs (up to 1.2 billion CZK), and allocating 10
billion CZK ($390 million) to the Czech-Moravian Guarantee and Development Bank
for immediate granting of interest-free loans with a one-year deferral with the
possibility of a two-year extension for businesses affected by the COVID-19
(―COVID Loans Program‖). (On March 16, the government earmarked another 1
billion CZK to the COVID Loans Program.)
March 13: Extended the deadline for the filing of tax returns until 1 July and waived
fines stemming from the late submission of tax declarations or reports.
March 13: The Czech Banking Association (ČBA) will allow banks to voluntarily
extend the deadlines on loan and mortgage payments.
March 23: Approved a five-fold rise in this year’s budget deficit, as it offers help to
businesses hit hard by the COVID-19 outbreak.
April 1: Announced that it had approved a scheme for a moratorium of up to six
months on consumer, company, and mortgage loan payments to help the country
through the COVID-19 crisis.
Denmark Danmarks Nationalbank
March 12: Released banks’ emergency buffer and will be offering low interest rate
loans to banks.
March 26: Injected $2.85 billion in loans to Danish banks and financial institutions by
auctioning off U.S. dollars in two loans with a maturity date on April 8 and June 19
and a cut-off rate of 0.32 and 0.34, respectively.
April 1: Sold $750 million worth of its mint 30-year government bonds in an auction
that was held a month early to expedite funding of aid packages due to COVID-19
that is expected to cost the state more than 60 billion Danish crowns ($8.8 billion).
Government of Denmark
March 10: Will grant tax breaks to businesses affected by the COVID-19 as part of a
series of measures worth $20 billion. Large businesses will be given an additional 30
days to pay value added tax, while all companies will be granted four additional

months to pay their labor contributions. The government is also lifting the ceiling on
businesses’ tax accounts, so that corporations can avoid paying the negative interest
rates they are charged when placing cash in the bank.
March 12: Indicated that it would release banks’ counter-cyclical capital buffer,
freeing about 200 billion Danish crowns ($30 billion) for lending. Other fiscal
measures, worth 2.8 billion Danish crowns ($416 million), include compensation to
companies for salary payments to employees who have fallen ill or been quarantined
due to the COVID-19.
March 18: Proposed an economic aid package worth 40 billion kroner ($5.8 billion)
to help small businesses cover (for three months) most of the losses in revenue and
some of their fixed expenses as a result of the COVID-19 outbreak. Under the
program, companies who have seen their revenues decline by 40% or more will
receive government grants to help cover between 25% to 80% of their fixed costs,
and self-employed and small firms who see their revenues fall more than 30% will also
be offered government compensation worth 75% of their normal monthly income.
March 31: Announced that it will postpone by three months around 200,000
companies’ deadline of end-May to submit their annual reports in an effort to help
companies affected by the COVID-19 outbreak.
Egypt Central Bank of Egypt
March 16: Cut by 300 basis points both the overnight lending rate (from 13.25% to
10.25%) and the overnight deposit rate (from 12.25% to 9.25%) in what it described
as a ―preemptive‖ move to support the economy in the face of the COVID-19
outbreak.
March 23: Told commercial banks to cut interest on dollar deposits to 1% above the
London Interbank Offered Rate (Libor) instead of 1.5% above Libor, starting March
23, in order to control the exchange market and reduce the expected dollarization
operations after cutting interest rates on March 16.
March 29: Instructed Egyptian banks to apply temporary limits on daily withdrawals
and deposits in a move seemingly designed to control inflation and hoarding during
the coronavirus’ spread, after 30 billion Egyptian pounds ($1.91 billion) were
withdrawn from banks in the past three weeks. The daily limit for individuals would
be 10,000 Egyptian pounds ($635) and 50,000 pounds for companies.
Government of Egypt
March 14: Indicated that the government will allocate 100 billion Egyptian pounds
($6.4 billion) to finance a ―comprehensive‖ state plan for combating the COVID-19
outbreak.
March 22: Announced that the government would allocate 20 billion Egyptian
pounds ($1.27 billion) to support the stock exchange.
March 30: Ordered relevant authorities to boost strategic reserves of staple goods,
as global concerns about food security rise amid the COVID-19 crisis.
Eswatini (Swaziland) March 21: The Central Bank of Eswatini cut its main lending rate by 100 basis points
to 5.5%, citing global and domestic economic developments and the impact of
COVID-19. The reduction was to ensure the equal pegging of the local currency with
the South African rand after the South African Reserve Bank (SARB) cut its main
lending rate by 100 basis points to 5.25% on March 19.
European Union European Central Bank (ECB)
March 12: Announced that it would provide banks with loans at a rate as low as
minus 0.75%, below the-0.5% deposit rate, increase bond purchases by 120 billion
euros ($135.28 billion) this year (with a focus on corporate debt), and allow euro
zone banks to fall short of some key capital and cash requirements (in order to keep
credit flowing to the economy).
March 18: Launched a new, 750 billion euro ($818 billion) temporary asset purchase
program of private and public sector securities to counter the risks posed by the
outbreak and escalating diffusion of COVID-19 (the Pandemic Emergency Purchase

Programme). Purchases will be conducted until the end of 2020 and will include all
the asset categories eligible under the existing asset purchase program. It will also
support commercial debt markets by expanding the range of eligible assets under the
corporate sector purchase program to nonfinancial commercial paper of sufficient
credit quality, and by easing collateral standards by expanding the scope of Additional
Credit Claims to include claims related to the financing of the corporate sector.
March 26: Announced that under the new 750 billion euro ($818 billion) temporary
bond purchase Pandemic Emergency Purchase Program (PEPP), it would not apply
self-imposed limits on how many bonds it could buy from any single euro zone
country. Under its long-running asset purchase scheme, the ECB has capped bond
buys at 33% of each euro zone state’s debt.
European Commission
March 11: Announced a 37 billion euro ($41 billion) ―Corona Investment Fund‖ that
would use ―spare‖ money from the EU budget to help businesses, health-care
systems, and sectors in need; additionally, the EU’s own investment fund will
guarantee 8 billion euros ($8.9 billion) of loans to 100,000 small- and medium-sized
enterprises and affected companies may be able to delay the payment of their existing
loans.
March 19: Adopted a Temporary Framework to enable Member States to use the
full flexibility foreseen under state aid rules to support the economy in the context of
the COVID-19 outbreak. It provides for five types of aid: (1) direct grants, selective
tax advantages and advance payments (Member States will be able to set up schemes
to grant up to 800,000 euros to a company to address its urgent liquidity needs); (2)
state guarantees for loans taken by companies from banks; (3) subsidized public loans
to companies; (4) safeguards for banks that channel state aid to the real economy;
and (5) short-term export credit insurance.
Fiji March 18: The Reserve Bank of Fiji cut its Overnight Policy Rate by 25 basis points
to 0.25% in order to stimulate demand and cushion the blow to its important tourism
industry from the global spread of COVID-19.
France Government of France
March 12: Pledged more generous guarantees on loans made to small businesses,
more cash for firms struggling to hold on to workers, and a solidarity fund to help
companies cushion the blow from the COVID-19 outbreak; it also announced that
the government would be ready to increase funds available to help companies reduce
workers’ hours, instead of laying them off.
March 16: Announced that the government would guarantee 300 billion euros in
bank loans for small and medium-sized businesses.
March 17: The Autorité des Marchés Financiers (AMF), France’s financial-markets
authority, stated that it would forbid short selling of stock in 92 companies during the
March 17 session.
March 17: Announced that it would spend 45 billion euros ($50 billion) to help small
businesses and employees struggling with the COVID-19 outbreak, including through
an expanded partial-unemployment package in which the state pays the salaries of
employees who are not needed during the crisis.
Gambia February 28: The Central Bank of The Gambia lowered its policy rate by 50 basis
points to 12.0% amid risks from the COVID-19 outbreak and uncertainty surrounding
global food prices.
Georgia April 1: The government announced that it will put 2 billion lari ($606 million) from
its state budget toward helping the economy through the COVID-19 pandemic, in
addition to 351 million lari that will be allocated for the healthcare system from the
state budget. The government will fund three months’ payments for electricity and
gas consumption to Georgians who used less than 200 kilowatts of electricity and 200
cubic meters of gas a month in March, April, and May.

Germany Government of Germany

March 13: Pledged to provide unlimited liquidity assistance to German companies hit
by the pandemic. (The measure envisages an expansion of loans provided by KfW, the
state development bank, and will allow companies to defer billions of euros in tax
payments.) The Bundestag also expanded the Kurzarbeit or short-time work scheme,
under which companies that put their workers on reduced hours can receive state
support. The government also indicated that it would boost investments by €3.1
billion per year (about $3.5 billion) between 2021 and 2024.
March 23: Agreed to a package worth more than 750 billion euros ($808 billion) to
mitigate the damage of the COVID-19 outbreak. It includes 156 billion euros in debt
to finance higher social spending, 50 billion-euro liquidity fund for self-employed
people, 600 billion-euro rescue fund (400 billion euros in guarantees,100 billion euros
in loans through state-run development bank KfW, and 100 billion euros earmarked
for equity stakes in companies). Additionally, the state’s KfW bank has 500 billion
euros available to boost liquidity of German companies.
March 30: Announced that, in response to COVID-19, it would expand export loan
guarantees on short-term payments to include transactions within the EU and with
Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, Britain, and the
United States.
Ghana March 18: The Bank of Ghana (Ghana’s central bank) cut its interest rate to 14.5%
from 16% due to the negative economic impacts it anticipates from the spread of the
COVID-19.
Greece Government of Greece
March 9: Will suspend the payment of sales taxes due at the end of March (for four
months) of social security contributions by companies (until June 30).
March 17: Announced a package of up to 2 billion euros ($2.20 billion) to support
businesses following the COVID-19 outbreak
March 17: The Hellenic Bank Association will offer businesses hit by the COVID-19
crisis a six-month freeze on loan payments as part of relief efforts to help borrowers
deal with the economic shutdown.
March 30: Announced new tax breaks and economic assistance to thousands of
businesses and workers to buffer its economy from a national lockdown triggered by
the COVID-19 pandemic. The support measures include a one-off benefit for 1.7
million, or 81% of private sector workers whose jobs are temporarily suspended and
payment of their social security contributions for 45 days, extend financial aid for the
self-employed, and suspend VAT and tax arrear payments for 800,000 businesses.
Guatemala March 29: The government announced that it would use nearly $26 million from an
emergency fund to help the country’s neediest families, as measures to combat the
spread of a COVID-19 impact on the economy and jobs, It plans to withdraw 200
million quetzals ($25.8 million) from the emergency fund and give families 1,000
quetzals ($129) to help pay for electricity, water and supplies.
Hong Kong Hong Kong Monetary Authority
March 3: Lowered its base rate charged through the overnight discount window by
50 basis points to 1.5% after the U.S. Federal Reserve delivered a rate cut of the same
margin.
March 16: Lowered its base rate charged through the overnight discount window to
0.86%, after the U.S. Federal Reserve delivered a rate cut. It also cut the level of
capital buffers it requires financial institutions to hold to 1% from 2% of their risk-
weighted assets to help companies and lenders weather the impact of the COVID-19
outbreak.
Government of Hong Kong

February 26: Announced a HK$120 billion ($15.4 billion) relief package as part of
its 2020-2021 budget, including a payment of HK$10,000 ($1,200) to each permanent

resident of the city 18 or older, paying one month’s rent for people living in public
housing, cutting payroll, income, property, and business taxes, low-interest,
government-guaranteed loans for businesses, and an extra month’s worth of
payments to people collecting old-age or disability benefits.
Hungary Hungarian National Bank
March 16: Announced emergency steps to help businesses, boosting the range of
collateral it accepts from banks and calling on lenders to apply a loan repayment
moratorium for firms hit by the coronavirus economic fallout. (It said in a statement
that performing corporate loans in domestic banks’ balance sheets totaled close to
3.6 trillion forints, and that it would apply a 30% haircut on those, boosting the range
of collaterals that can be used and thus also lifting banks’ lending potential by more
than 2.5 trillion forints ($8.10 billion)). It also offered to inject forint liquidity into the
banking system via foreign exchange swaps.
March 18: Urged domestic banks to introduce a moratorium on household loan
repayments considering the ―extraordinary situation‖ due to the coronavirus crisis,
and that if banks did not bring in the measure, the Bank would ask the government to
pass a decree enforcing it. It also announced that it was considering restarting its
mortgage note buying program to provide more long-term liquidity for the banking
system and reduce the financing costs of household loans.
March 24: Launched new measures to boost liquidity and flagged further steps if
needed to prevent long-term damage to the economy from the coronavirus
pandemic. It moved to pump more money into the banking system by introducing a
massive fixed-rate collateralized loan instrument. Lending will be provided to banks at
a fixed interest rate in unlimited quantity, to support bank lending and also
government bond purchases. It also released domestic lenders from the requirement
to hold a certain level of cash as reserves.
April 1: Announced its collateralized loan tenders, offering liquidity to banks at a
fixed rate of 0.9% on various maturities, and that it would offer them to domestic
open-ended investment funds, in order to support the government securities market
and the real estate market and help offset the fallout from the coronavirus pandemic.
Government of Hungary
April 4: Created a $2 billion special fund to aid the fight against COVID-19 and it will
include contributions from banks and foreign retailers. Hungarian banks will be
expected to pay 55 billion forints ($163 million) in the fund this year, with
multinational retailers adding 36 billion forints. Local governments will have to divert
vehicle taxes amounting to a total of 34 billion forints to the fund, while political
parties will pay half of their central budget revenue to the fund for a total of 1.2
billion forints.
April 6: Announced a stimulus package, which includes subsidized loans to Hungarian
companies and funds to preserve jobs. It would amount to 18%-20% of gross
domestic product (GDP), including National Bank of Hungary programs. The prime
minister said that the government was ready to pay some of the wage costs of
companies forced to cut working hours, would support investments with 450 billion
forints ($1.3 billion), and would provide targeted support for sectors such as tourism,
the food industry, and construction. Subsidized loans to companies will total more
than 2 trillion forints, while pensioners will get one month’s extra pension to be
disbursed in four tranches from early 2021.
Iceland The Central Bank of Iceland
March 11: Cut its benchmark interest rate by 50 basis points to 2.25%, as it tries to
alleviate the potential impact of the COVID-19 on its tourism-dependent economy. It
will also lower deposit institutions’ average reserve requirement to 0% from 1% to
ease banks’ liquidity positions.
March 18: Cut its key interest rate for the second time in a week by 50 basis points
to 1.75% and reduced the banks’ countercyclical capital buffer to 0% from 2%.

March 23: Announced that it would start buying up treasury bonds in order to boost
liquidity and support government plans to increase spending to help the economy
weather the COVID-19 outbreak.
Government of Iceland
March 10: Announced an action plan to respond to the economic impact of COVID-
19, which includes deferring taxes and levies, providing temporary relief to the
tourism industry, and accelerating ongoing and planned infrastructure projects.
March 21: Announced a 230-billion-krona ($1.6 billion) package (8% of gross
domestic product) to cushion the impact of COVID-19 on the economy. It includes
state guarantees on bridge loans to businesses and the payment of as much as 75% of
an employee’s lost salaries over the next two-and-a-half months. In addition, public
projects worth 20 billion krona will be moved forward to this year and tax breaks for
banks will be implemented sooner than originally planned.
India Reserve Bank of India
March 12: Announced a $2 billion injection into the foreign-exchange market to
support the rupee.
March 13: Announced a plan to add liquidity through short-term repurchase
operations.
March 14: Plans to infuse 250 billion rupees ($3.4 billion) into the system through
short-term repurchase operation.
March 19: Announced that it will buy bonds on the open market for a total of 100
billion Indian rupees ($1.35 billion) due to mature between 2022 and 2025 to try to
keep all market segments liquid and stable.
March 27: Lowered its benchmark repo rate by 75 basis points to 4.40% and
announced several other steps to tackle the impact of COVID-19 on various
industries from the lockdown, some of which include cutting banks’ cash reserve
ratio and targeted long term repos operations. The reverse repo rate was reduced by
90 basis points to 4%.
Government of India
March 15: Pledged $10 million towards South Asian Association for Regional
Cooperation (SAARC) ―COVID-19 emergency fund.‖
March 15: Is reportedly ―pushing‖ state-run banks to approve new loans amounting
to 500 billion-600 billion rupees by the end of March.
March 26: Announced a 1.7-trillion-rupee ($22.6 billion) economic stimulus plan
providing direct cash transfers and food security measures to give relief to millions of
poor people hit by a nationwide lockdown over COVID-19. It will provide direct cash
transfers to 200 million women and the elderly, hand out free cooking gas cylinders
to 83 million poor families, and help feed about 800 million poor people over the
next three months by distributing 5 kilograms of staple food-grains wheat or rice for
each person free of cost, with a kilogram of pulses for every low-income family. The
government outlined plans for medical insurance cover of 5 million rupees ($66,000)
for every frontline health worker, from doctors, nurses and paramedics to those
involved in sanitary services.
Indonesia Bank Indonesia (Bank Sentral Republik Indonesia)
February 20: Cut the seven-day reverse repurchase rate by 25 basis points to
4.75%.
March 19: Cut the seven-day reverse repurchase rate by 25 basis points to 4.50%
and indicated that it will intensify intervention to ensure market confidence and
liquidity. It has purchased government bonds to combat capital outflows amid the
COVID-19 epidemic, including 27 trillion rupiah ($2 billion) on February 20 and 6
trillion rupiah ($405 million) on March 13, adding to 8 trillion rupiah of bonds
purchased March 12.

March 25: Announced with the country’s financial regulator that currency market
and stock trading hours will be limited next week as part of efforts to contain the
spread of COVID-19.
Government of Indonesia
February 25: Announced a stimulus package worth 10.3 trillion rupiah ($742.6
million) to protect its economy from the impact of the COVID-19 outbreak. It
includes 4.6 trillion rupiah in subsidies for basic needs for poor households, 1.5
trillion rupiah for the state property financing program, 443.4 billion rupiah for
airlines and travel agents, 298.5 billion rupiah to bring in foreign tourists, 3.3 trillion
rupiah cover for shortfalls in regional budgets, and fiscal transfers (147 billion rupiah).
March 13: Announced a 120 trillion rupiah ($8.1 billion) stimulus package to support
the economy, of which 22.9 trillion rupiah will be tax breaks, lasting six months
starting in April. The government is also exempting companies in 19 manufacturing
sectors from having to pay import taxes, while giving them a 30% corporate tax
discount, relaxing rules for exports (e.g., fisheries and forestry products) and imports
(e.g., steel, sugar, flour and salt), and easing rules on loan restructuring for small- and
medium-sized companies.
March 17: Ordered the Finance Minister to divert 40 trillion rupiah ($2.7 billion)
from the non-urgent government budget to increase spending in programs that could
provide direct support to household consumption or increase people’s purchasing
power.
March 31: Announced a national public health emergency and that it would spend
405.1 trillion rupiah ($24.85 billion) more on COVID-19 response, social welfare
programs, and economic stimulus, including a 3 percentage point cut in corporate tax
rates to 22%.
Iran Central Bank of Iran
February/March: Indicated that it would help small businesses affected by the
COVID-19 outbreak by providing tax breaks and allowing defaults on bank loans for
several months.
March 12: Requested $5 billion emergency funding from the International Monetary
Fund’s Rapid Financing Instrument to help Iran fight the COVID-19 outbreak.
March 17: Allocated at least 250 million euro to import medicine and medical
equipment required to fight COVID-19.
Government of Iran
March 12: Asked the United Nations to allocate resources to help it tackle COVID-
19 and facilitate imports as a way of boosting the country’s sanctions-hit healthcare
system.
March 15: Announced a series of banking, welfare and tax relief measures to
support businesses and families as the COVID-19 outbreak puts severe strain on the
economy. Employees will be able to defer health insurance, tax and utility bill
payments for the next three months, while the 3 million poorest Iranians will receive
an additional cash subsidy starting March 17, 2020.
March 23: The European Union’s High Representative of the Union for Foreign
Affairs and Security Policy (Josep Borrell) announced that the EU would provide 20
million euros in humanitarian aid to Iran to help alleviate the COVID-19 and support
Iran’s request for IMF financial help.
March 26: President Hassan Rouhani wrote to Supreme Leader Ayatollah Ali
Khamenei requesting permission to withdraw $1 billion from the country’s sovereign
wealth fund (the National Development Fund) to support the healthcare system,
which is overstretched by the COVID-19 outbreak.
March 28: Announced that it would allocate 20% of its annual state budget to
fighting the pandemic in the country. The budget allocation, amounting to about 1,000
trillion rials, would include grants and low-interest loans to those affected by COVID-

19, Rouhani said. While the allocated amount is worth some $6.3 billion at the rial’s
free market exchange rate of about 160,000 rials per dollar, the government may
decide to allocate some of the funds at the official rate of 42,000 (which is used to
subsidize food and medicine).
Ireland March 9: The government announced that it will set aside 3 billion euros ($3.44
billion) to provide additional funding to the health service (435 million euros), boost
workers’ sick pay and benefits (2.4 billion euros), and offer liquidity assistance to
businesses affected (200 million euros).
Israel Bank of Israel
March 18: Announced it would allocate up to $15 billion for swap transactions
between currencies for domestic banks, part of a move aimed at shoring up the
Israeli economy amid the COVID-19 pandemic.
April 6: Cut its benchmark interest rate to 0.1% from 0.25%, its first rate cut in five
years, expanded its repo transactions so that the agreements can include corporate
bonds—in addition to government bonds—as security, and will provide loans to
banks for a term of three years (with a fixed interest rate of 0.1%) with the goal of
increasing the supply of bank credit to small businesses. The size of the plan will be 5
billion shekels.
Government of Israel
March 9: The Finance Ministry announced that it was opening a 4 billion-shekel
credit line for banks to lend money to small and medium-sized businesses facing a
cash crisis with a high-level government guarantee.
March 11: Will expand an aid package (for a second time) to help the country deal
with the COVID-19 outbreak by 6 billion shekels to a total of 10 billion shekels ($2.8
billion). Of that, 8 billion shekels will be in a fund to provide cheap loans to
businesses, 1 billion shekels will boost the health system by increasing medicine
stocks and preparing hospitals to receive a larger number of patients, and 1 billion will
be earmarked for needs such as the police force.
March 16: Will expand its aid package (for a third time) to help businesses hurt by
the COVID-19 crisis by another 5 billion shekels ($1.3 billion).
March 30: Announced that it will spend 80 billion shekels ($22 billion) to help the
economy weather the COVID-19 crisis—70 billion shekels in addition to 10 billion
already promised to boost welfare services for those who have lost their jobs or are
on unpaid leave and to assist the private sector. It includes a 20-billion-shekel social
safety net, with stipends for those who lost income; 40 billion shekels earmarked to
assist businesses with tax breaks, loans, and other services; about 10 billion for the
healthcare system; and nearly 8 billion will be spent to speed up the recovery.
Italy Government of Italy
March 11: Announced two packages worth 25 billion euros ($28.3 billion): A
package worth 12 billion euros will provide extra funding for the health system as
well as a mix of measures to help companies and households, including freezing tax
and loan payments and boosting unemployment benefits to ensure no jobs were lost.
The remainder will be a reserve to pay for any further measures. The government
also indicated that payments on mortgages will be suspended across Italy. ABI, Italy’s
banking lobby, said lenders would offer debt moratoriums to small firms and
households grappling with the economic fallout from the virus.
April 6: Announced a new emergency decree aimed at granting liquidity and bank
loans worth more than 400 billion euros to companies hit by COVID-19. The new
legislation, combined with a previous stimulus package in March, would allow banks
to offer credit totaling over 750 billion euros ($809.78 billion).
Japan Bank of Japan
March 16: Announced that it would (1) double its upper limit of annual purchases of
exchange traded funds to 12 trillion yen ($112.46 billion) and of real-estate
investment trusts to 180 billion yen ($1.7 billion) per year, (2) expand its upper limit

of its corporate bond balance and commercial paper balance by 1 trillion yen ($9.5
billion) each, and (3) start a lending program for commercial banks, providing them
with one-year loans in exchange for corporate collateral worth 8 trillion yen ($75.6
billion).
Government of Japan
February 13: Unveiled a set of measures worth 15.3 billion yen ($140 million) to
fight the spread of COVID-19; secured 500 billion yen ($4.7 billion) for emergency
lending and loan guarantees at the Japan Finance Corporation and other institutions
for small businesses hit hard by the virus outbreak.
March 10: Unveiled a second package of measures totaling 430.8 billion yen ($4.1
billion) in spending to cope with the fallout of the COVID-19 outbreak (focusing on
support to small and mid-sized firms) and boosted to 1.6 trillion yen ($15.1 billion) its
special financing for small- and mid-size firms hit by the virus, up from 500 billion yen.
March 23: Announced that it is working on a package of measures to combat the
widening economic fallout from the COVID-19 that will involve direct fiscal spending
exceeding 15 trillion yen ($137 billion). Including loans and other steps that does not
include direct spending, the size of the package may exceed 30 trillion yen.
April 6: Announced a 108 trillion yen ($989 billion, equivalent to 20% of gross
domestic product) stimulus package, Japan’s largest ever, to rescue the COVID-19-hit
economy. It will include cash handouts worth 6 trillion yen for households and small
businesses hit by the virus and offers businesses deferrals on tax and social service
costs worth 26 trillion yen. The first phase of the package aims to stop job losses and
bankruptcies, while a second round of aid, after the virus is contained, will try to
support a V-shaped economic recovery.
Kazakhstan National Bank of Kazakhstan
April 3: Cut its policy rate to 9.5% from 12.0% in an unscheduled move aimed at
boosting economic growth.
Government of Kazakhstan
March 23: The president ordered state-owned companies to start selling part of
their foreign currency revenue on the domestic market to support the local tenge
currency (and to pay out up to 100% of last year’s profits in dividends) in order to
soften the impact of the oil price crash and the COVID-19 outbreak on the economy.
He also ordered a standstill on bank loan repayments by individuals and small- and
medium-sized businesses for the duration of the state of emergency, announced that
the government would pay 42,500 tenge ($95) per month to people who have lost
their source of income, was delaying tax payments for small businesses, and stood
ready to more than triple spending on a program to provide temporary employment
through infrastructure maintenance and construction projects. Together with soft
loan program and other spending, the volume of the stimulus package is expected to
reach $10 billion.
April 2: Announced that it plans to borrow $3 billion on foreign capital markets to
finance its budget deficit this year, due to the collapse in energy prices and the
additional stimulus spending amid the COVID-19 outbreak.
Kenya Central Bank of Kenya
March 23: Cut its benchmark lending rate by 100 basis points to 7.25% and lowered
the cash reserve ratio for commercial banks to 4.25% from 5.25%. The move to
lower the cash ratio is expected to release an extra 35.2 billion shillings ($330.83
million) for banks to lend to customers trying to deal with the outbreak.
Government of Kenya
March 16: The World Bank announced that it is making $60 million available to
Kenya’s health sector to help it deal with the COVID-19 outbreak.
March 24: Announced that it will seek emergency assistance from the IMF of up to
$350 million, and $750 million from the World Bank, release 49 billion shillings ($460

million) to pay pending bills to suppliers, and expedite the payment of close to 10
billion ($94 million) shillings in value-added tax refunds to businesses in the next two
to three months.
March 25: Announced that the value-added tax rate would be cut to 14% from 16%
and corporation tax would be reduced to 25% from 30% under plans scheduled to
come into force by April, and that there would be 100% tax relief for Kenyans
earning a monthly income of up to 24,000 Kenyan Shillings ($226) to increase their
disposable income.
Kuwait Central Bank of Kuwait
March 16: Cut by 100 basis points its deposit rate to 1.5% and its overnight, one-
week, and one-month repo rates to 1%, 1.25%, and 1.75%, respectively.
April 2: Announced a stimulus package to support vital sectors and small and
medium enterprises (SMEs) amid the fallout from the COVID-19 pandemic. It cut
capital adequacy requirements by 2.5%, eased the risk weighting for SMEs to 25%
from 75%, raised the maximum lending limit to 100% from 90%, and increased the
maximum financing for residential real estate developments to the value of the
property or the cost of development. The measures are expected to raise banks’
lending capacity by 5 billion dinars ($16 billion).
Government of Kuwait
April 1: Announced measures aimed at shoring up its economy against the pandemic,
including soft long-term loans from local banks to provide liquidity for small and
medium-sized enterprises and directing government agencies to pay obligations to the
private sector as soon as possible.
Malaysia Government of Malaysia
February 27: Announced the ―Economic Stimulus Package 2020‖ to mitigate the
economic impact of COVID-19, improve the cash flow of affected businesses,
stimulate private consumption, and accelerate domestic investment activities. It
includes exempting accommodation services from services tax, providing sales tax
exemptions, and lifting duties on certain imports.
March 27: Announced a stimulus package worth 250 billion ringgit ($58.28 billion),
its second in a month, to help cushion the economic blow from the pandemic. It
includes a 25 billion ringgit direct fiscal injection by the government aimed at helping
families and business owners; one-off payments and discounts on utilities for people
whose livelihoods have been affected; 1 billion ringgit for a food security fund; and a
50 billion ringgit loan scheme for larger companies, which will offer guarantees of up
to 80% of the sum borrowed to shore up working capital in the corporate sector.
Mauritius March 10: The Bank of Mauritius cut its key repo rate by 50 basis points to 2.85%
amid the COVID-19 outbreak, which is expected to have a significant impact on the
domestic economy.
Mexico Banxico (Bank of Mexico)
February 13: Cut its key rate by 25 basis points to 7.0%.
March 19: Lowered its benchmark interest rate by 50 basis points to 6.50% in an
out-of-cycle cut in a bid to support the country’s financial markets, reduced the rates
on its additional ordinary liquidity facility, and cut by 50 billion pesos ($2.06 billion)
the monetary regulation deposit that private banks must observe.
Moldova National Bank of Moldova
March 4: Cut its main interest rate by 100 basis points to 4.50%, citing the domestic
disinflationary trend and global economic concerns related to the COVID-19
outbreak.
March 20: Cut its main interest rate for the second time in March to 3.25% from
4.50% in order to support banking system amid markets volatility due to the COVID-
19 spread.

Mongolia March 11: The Central Bank of Mongolia cut its policy rate 100 basis points to
10.0% in response to increased uncertainties in connection with the spread of
COVID-19. It also lowered the reserve requirement on banks..
Morocco March 15: Morocco’s King Mohammed VI ordered the creation of a 10 billion-
dirham ($1 billion) fund to upgrade health infrastructure, help vulnerable economic
sectors such as tourism, maintain jobs, and mitigate the social repercussions of the
outbreak.
March 17: Bank Al-Maghrib (Central Bank of the Kingdom of Morocco) cut its
benchmark interest rate by 25 basis points to 2% in order to help shore up economic
activity following a drought and the outbreak of COVID-19.
Netherlands Government of the Netherlands
March 12: Announced that it would expand loan guarantees for small and medium
sized enterprises, from 50% to 75%.
March 12: The Tax Authority will allow companies affected by COVID-19 to defer
income, corporate, turnover, and wage taxes for the time being.
March 17: Announced measures to support companies, ranging from tax
exemptions to having up to 90% of wages lost for work hour reductions paid by the
government.
New Zealand Reserve Bank of New Zealand
March 16: Cut the official cash rate by 75 basis points to a record low of 0.25%, and
pledged to keep it at this level for at least 12 months.
March 22: Announced that it will purchase up NZ$30 billion ($17 billion) of
government bonds in the secondary market over the next 12 months. It will seek to
buy NZ$750 million bonds a week across a range of maturities, via an auction
process.
March 24: Reduced banks’ core funding ratios to 50% from 75% to help banks make
credit available.
March 30: Announced that it was deploying more tools to provide additional
liquidity to the corporate sector and support market functioning to offset the impact
of the pandemic. A new weekly Open Market Operation—to be held each Tuesday—
will provide liquidity in exchange for eligible corporate and asset-backed securities by
offering up to NZ$500 million ($300 million) for terms out to approximately three
months, starting on March 31. The bank also will offer to purchase government bonds
maturing on May 15, 2021, for liquidity management purposes.
Government of New Zealand

March 16: Announced a spending package of NZ$12.1 billion ($7.3 billion),
equivalent to 4% of GDP in an attempt to fight the effects of COVID-19 on the
economy; approximately NZ$5 billion will go toward wage subsidies for businesses,
NZ$2.8 billion toward income support, NZ$2.8 billion in business tax relief, and
NZ$600 million toward the airline industry.
March 24: Announced that retail banks will offer a six-month principal and interest
payment holiday for mortgage holders and small business customers whose incomes
have been affected by the economic disruption from COVID-19. The government and
the banks will also implement a NZ$6.25 billion ($3.62 billion) Business Finance
Guarantee Scheme for small and medium-sized businesses. It will include a limit of
NZ$500,000 per loan and will apply to firms with a turnover of between
NZ$250,000 and NZ$80 million per annum (the government will carry 80% of the
credit risk, with the other 20% to be carried by the banks).
Norway Norges Bank
March 13: Cut its key interest rate to 1% from 1.5%, as it seeks to counter the
economic impact of the COVID-19 pandemic. It indicated that it would offer funding
to banks to help counter the volatility in financial markets and announced that banks’

countercyclical capital buffer would be reduced from 2.5% to 1%, to help banks
continue to lend money.
March 20: Cut its key policy rate by 75 basis points to 0.25% from 1.0% in a bid to
alleviate the economic impact from the COVID-19 outbreak. It also offered a third
batch of extraordinary loans to the banking industry to ensure it has enough for the
months ahead.
March 30: Increased its planned issuance of government bonds this year to between
70 billion and 85 billion Norwegian crowns ($6.68 billion-$8.11 billion) from an
original plan of 55 billion crowns, following the government’s decision to offer loans
worth tens of billions of crowns in emergency funding to companies hurt by the
coronavirus outbreak.
March 31: Will increase further its daily purchase of Norwegian currency to 2 billion
crowns ($190 million) per day from 1.6 billion crowns in order to make funds
available for the government’s fiscal budget. (On March 18, it announced that it would
increase it to 1.6 billion Norwegian crowns per day from 500 million crowns.)
Government of Norway
March 13: Announced that it would pay a greater part of the bill for all companies
seeking to make temporary layoffs, suspended all airport fees for the first six months
of 2020, and lifted for a period of 10 months the tax charged for each passenger.
March 15: Announced that it would offer companies at least 100 billion Norwegian
crowns ($9.7 billion) in funding in the form of loan guarantees (50 billion crowns to
small and medium sized companies seeking bank loans) and bond issues (50 billion
crowns to large firms issuing corporate bonds). In addition, payments of payroll taxes
will be postponed.
March 20: Presented legislation that would temporarily reduce the value-added tax,
postpone tax filing deadlines and add worker and business protections under a 280
billion kroner ($24 billion) plan to boost the economy amid the pandemic. Along with
the tax provisions, the legislative package includes two previously announced lending
programs that the government said would provide up to 100 billion kroner in support
for Norwegian businesses, improving their access to credit to ensure liquidity.
March 27: Proposed new measures to support businesses hit by the viral outbreak
and a sharp fall in the price of oil. They include, among other things, covering fixed
costs for companies affected by the coronavirus outbreak at a cost of 10 billion to 20
billion Norwegian crowns ($958 million to $1.92 billion) per month for two months.
Oman March 18: The Central Bank of Oman announced that it will provide about 8 billion
Omani rials ($20.8 billion) in extra liquidity to banks as one of several measures
aimed at supporting the economy. It also asked banks to cut banking fees, adjust
capital and credit ratios, allow repayment postponements for up to six months, and
facilitate lending, particularly in sectors affected by the COVID-19, including
healthcare, travel and tourism.
Pakistan State Bank of Pakistan
March 17: Cut its key interest rate by 75 basis points to 12.50% in response to the
anticipated slowdown due to COVID-19, provided additional support to investment,
offering a new package of 100 billion rupees ($630.5 million) for investment in the
manufacturing sector to fund investors at 7% for 10 years., and announced that it
would refinance banks to provide 5 billion rupees ($31.5 million) at a maximum of 3%
for the purchasing of equipment used to fight the COVID-19.
March 24: Cut its benchmark interest rate for the second time in a week, lowering
it by 150 basis points to 11% amid considerable uncertainty about how the COVID-
19 outbreak would impact the global economy and Pakistan.
Government of Pakistan
March 24: Announced a financial-relief package of more than 1 trillion rupees ($6.3
billion) to support the economy and poorer workers. It will include help to the

export and industry sectors, tax breaks, procurement of medical and other
equipment required to fight the pandemic, and the distribution of a monthly cash
stipend among the poor.
Paraguay Central Bank of Paraguay
March 13: Cut its benchmark interest rate by 25 basis points to 3.75%, as part of a
series of measures aimed at dealing with the impact of the COVID-19 outbreak.
Banks’ reserve requirements will also be reduced to help the financial sector
refinance debts.
Government of Paraguay
March 13: Announced tax relief measures, as well as $150 million of credit lines in
state banks and loans from multilateral agencies.
Peru Central Reserve Bank of Peru
March 19: Cut its benchmark interest rate by 100 basis points to 1.25%, from 2.25%
to counter the economic impact of the COVID-19 pandemic and announced that, if
necessary, could employ other additional liquidity injection instruments to alleviate
the crisis.
March 29: Announced that that as part of the 90 billion soles stimulus plan
announced on March 29, the Bank would inject 30 billion soles into banks for loans to
mainly smaller companies to help cover their working capital.
April 2: Announced that it is preparing a major bond issuance to help underwrite an
unprecedented stimulus package to counter the economic impact of the fast-
spreading pandemic.
Government of Peru
March 29: Announced that it is planning an economic stimulus package worth
around 90 billion soles ($26.41 billion or 12% of gross domestic product) to support
citizens and the key mining sector that have been impacted by COVID-19. It will have
three phases of 30 billion soles each: containing the disease, ensuring companies’
payment chains by granting credit guarantees, and reactivating production, particularly
in the copper industry.
Philippines Central Bank of the Philippines (Bangko Sentral ng Pilipinas)
March 19: Cut the rate on its overnight reverse repurchase facility by 50 basis
points to 3.25%, authorized a temporary relaxation of regulations on compliance
reporting by banks, calculations of penalties on required reserves and single borrower
limits, and approved a temporary reduction to zero of the term spread on
rediscounting loans relative to the overnight lending rate.
March 23: Revealed it would purchase up to 300 billion Philippine peso ($5.9 billion)
worth of short-term securities under a repurchase agreement with the Bureau of the
Treasury in a bid to inject a fresh round of liquidity into the market and to keep a lid
on interest rates in the process.
March 24: Announced a 200 basis points reduction in the reserve requirement ratio
(RRR) to calm financial markets and boost lending. The cut, effective March 30, will
bring the ratio to 12% and ensure there is sufficient liquidity to counter the economic
impact of the COVID-19 outbreak.
Government of the Philippines

March 13: Instructed the Government Service Insurance System and the Social
Security System ―to take advantage of the low stock prices" and "support the stock
market by at least doubling their daily average purchase volumes" from 2019.
March 16: The government announced a 27.1-billion peso package to help fight the
COVID-19 pandemic and provide economic relief to affected sectors.

March 17: The Philippine Stock Exchange halted all stock, bond and currency trading
until further notice, after President Rodrigo Duterte placed Luzon, the country’s
economic powerhouse, under ―enhanced community quarantine‖.
March 22: The Philippine Congress is reportedly drafting a stimulus package of at
least 200 billion pesos ($3.9 billion) as part of a supplemental budget to shore up the
economy from the impact of the COVID-19 outbreak.
March 19: The Philippine Stock Exchange reopened with shortened hours.
Poland National Bank of Poland
March 17: Cut its benchmark interest rate by 50 basis points to 1.0% from 1.5% in
response to the COVID-19 pandemic; it also lowered its lombard rate to 1.50% from
2.50% and the rediscount rate to 1.05% from 1.75%, reduced banks’ required reserve
ratios to 0.5% from 3.5%, announced plans to boost banking sector liquidity (through
the extension of repo operations), and offered ―large-scale‖ purchases of government
bonds as part of its open-market operations.
Government of Poland
March 18: Announced an economic stimulus package of 212 billion zloty ($52 billion,
or approximately 9% of gross domestic product) to assist entrepreneurs and
employees during the COVID-19 crisis. It consists of 5 pillars: employee safety,
company financing, health protection, strengthening the financial system, and a public
investment program. Specific measures include holidays in debt repayments and social
contributions, loan guarantees, as well as payments of salaries to those unable to
work.
March 26: Announced that the state bank BGK will issue bonds worth around 16
billion zlotys ($3.9 billion) in 2020-2021 as part of a wider plan to combat the
coronavirus impact on the economy. The state will buy the bonds back in 2021-2025,
spending around 2.5 billion zlotys a year in the first year and then around 3.7 billion
zlotys annually.
Portugal Government of Portugal
March 13: Announced a 2.3 billion-euro package that will include delaying some tax
payments and granting soft loans. Companies will be allowed to suspend social
security payments and maintain employees’ contracts with payments equal to two-
thirds of salaries, funded largely by the state, and workers who have to stay at home
to care for school children of up to 12 years of age will receive 66% of their base
salaries.
March 18: Announced a 9.2 billion-euro package to support workers and provide
liquidity for companies affected by the COVID-19 outbreak. It consists of 5.2 billion
euros in fiscal stimulus, 3 billion in state-backed credit guarantees, and 1 billion
related to social security payments. (Just over half of the 3 billion euros in credit lines
announced is aimed at companies working in tourism, hotels and restaurants. The
other half goes to industries like textiles, clothing and wood. Around a third is set
aside for micro and small enterprises.)
Qatar Qatar Central Bank
March 16: Cut the deposit rate by 50 basis points to 1%, lending rate by 100 basis
points to 2.50%, and repurchase rate (repo) by 50 basis points to 1%.
Government of Qatar
March 15: The Emir of Qatar announced several measures to shield the economic
and financial sectors in the country from the impact of the COVID-19, including: (1)
allocating 75 billion Qatari riyals ($20.6 billion) to support and provide financial and
economic incentives in the private sector, (2) directing the Central Bank of Qatar to
provide additional liquidity to banks operating in the country and putting in place the
appropriate mechanism to encourage banks to postpone loan installments and
obligations of the private sector with a grace period of six months, (3) directing the
Qatar Development Bank to postpone the installments for all borrowers for a period

of six months, (4) directing the government to increase its investments in the stock
exchange by 10 billion Qatari riyals ($2.75 billion), (5) exempting food and medical
goods from customs duties for a period of six months, and (6) exempting the various
sectors of the economy from electricity and water fees for a period of 6 months.
Romania March 20: The National bank of Romania cut its benchmark interest rate by 50 basis
points to 2.0% in order to curb the economic fallout from the COVID-19 outbreak. It
also cut its lending rate facility to 2.50% from 3.50% and will provide liquidity to banks
via repo transactions and purchase leu-denominated debt on the secondary market.
Saudi Arabia Saudi Arabian Monetary Authority
March 15: Announced that it had prepared a 50 billion riyal ($13.32 billion) package
to help small and medium-sized enterprises cope with the economic impacts of
COVID-19; it also lowered by 75 basis points both its repo rate to 1%, and its
reverse repo rate to 0.5%.
Government of Saudi Arabia

March 20: Introduced an additional stimulus package worth 120 billion riyals ($32
billion) to aid businesses, including the postponement of value-added tax (VAT),
excise tax, and income tax payments for a period of three months and exemptions of
various government levies and fees.
March 30: Announced that it will finance treatment for anyone infected with
COVID-19 in the country, and took steps to boost wheat and livestock supplies amid
global fears of a food shortage.
Serbia National Bank of Serbia
March 11: Cut its reference interest rate by 50 basis points to 1.75% to help
minimize economic disruption caused by the COVID-19 outbreak.
Government of Serbia
March 29: Announced that it plans to offer about 5 billion euros ($5.54 billion) in
loans and subsidies to businesses to help them cope with the economic impact of
COVID-19 and make a one-time payment of 100 euros to every citizen older than
18. The president indicated that the state would use 700 million euros to pay
minimum wages of 30,367 dinars ($288.58) and allow tax delays for micro and small
enterprises for the three months after the end of the state of emergency to avoid job
loss.
Seychelles March 24: The Central Bank of Seychelles cut its monetary policy rate by 100 basis
points to 4.0%, indicating that this was the first phase of its response to the challenge
from the spread of the COVID-19, which is expected to lower this year’s earnings
from tourism by 70% and trigger a double-digit drop in economic growth.
Singapore Monetary Authority of Singapore
March 30: Announced that it would adopt a 0% per annum rate of appreciation of
the policy band starting at the prevailing level of the Singapore Dollar Nominal
Effective Exchange Rate (S$NEER), currently slightly below the mid-point of the
policy band.
Government of Singapore
February 18: Announced around $4.5 billion in financial packages to help contain
the COVID-19 outbreak, including $575 million to fight and contain the disease,
mainly through healthcare funding, and 4 billion in economic stimulus measures to
manage its impact on businesses, jobs and households.
March 26: Unveiled stimulus plan worth around S$48 billion ($33.7 billion) to deal
with the economic fallout from COVID-19 (of which S$17 billion will be drawn from
the national reserves). A key part of the stimulus package involves ramping up a jobs
support scheme first announced in February. The government will now offset up to

25% of the first S$4,600 of workers’ monthly wages for a nine-month period (up from
the 8% quantum and S$3,600 cap announced in February), while self-employed
workers will be eligible to receive monthly payments of S$1,000 for nine months.
Some hard-hit sectors will receive additional support: the government would offset
up to 50% of wages in the food services sector and up to 75% of wages in the aviation
and tourism sectors. A previously announced cash payout to all adult Singaporeans
would be tripled and low-income families will also receive grocery vouchers.
Slovakia Government of the Slovak Republic
March 29: Announced plans for an aid package of up to 1 billion euros a month to
help firms and employees hurt by the pandemic. Under the plan, the state would (1)
pay 80% of wages for employees at firms forced to shut, (2) help self-employed
people and employees in firms that suffer falling revenue, with payments linked to the
size of the revenue drop, (3) allow employers to postpone their contributions to
state social and health systems and delay some tax payments if they suffer a 40% drop
in revenue; (4) allow firms to offset accumulated losses from past years going back to
2014 against corporate income tax, and (5) offer firms bank guarantees of up to 500
million euros a month.
South Africa South African Reserve Bank
March 19: Cut its main lending rate by 100 basis points to 5.25% as it sought to
offset the drag from the COVID-19 outbreak and the plunge in oil prices.
March 20: Announced measures to inject liquidity into local markets, including
intraday overnight supplementary repos to provide liquidity support to clearing banks,
lowering the standing facilities’ borrowing rate by 100 basis points to 200 basis point
below the benchmark repo rate, and lowering the standing facilities’ lending rate to
the repo rate from the previous rate of repo plus 100 basis points.
March 25: Announced that it would begin buying an unspecified amount of
government bonds as part of additional emergency policy measures aimed at easing a
severe liquidity crunch triggered by the COVID-19.
South Korea Bank of Korea
March 16: Cut the seven-day repurchase rate by 50 basis points to 0.75% in an
effort to soften the impact of the COVID-19 pandemic on the Korean economy. It
also lowered borrowing costs for the bank’s low interest rate loan programs and
relaxed collateral rules of its repurchasing operations, to ensure companies can easily
and cheaply access credit.
March 19: Announced that it will buy government bonds worth 1.5 trillion won
($1.2 billion) to bolster liquidity in the bond market and back short-term liquidity in
banks under increased loan demand due to fallout from COVID-19.
Government of the Republic of Korea

March 3: Announced a 11.7 trillion won ($9.8 billion) stimulus package that includes
funding for medical institutions and quarantine efforts, assistance to small- to
medium-sized businesses struggling to pay wages to their workers, and subsidies for
child care.
March 17: The National Assembly approved a supplementary budget worth 11.7
trillion won ($9.4 billion) to help contain COVID-19 and cushion the economic
fallout. The government has indicated that it plans to execute at least 75% of its
spending within the next two months.
March 18: Pledged 50 trillion won ($40 billion) in emergency financing for small
businesses and other stimulus measures to help the economy. Some highlights of the
package include 12 trillion won in low-interest financing for small firms, 5.5 trillion
won in loan guarantees, easing loan terms and suspending interest payments for small
businesses. The Bank of Korea reportedly will actively provide liquidity support for
around half of the new package.

March 20: South Korea’s financial authorities and local banks agreed to set up a
bond market stabilization fund worth more than 10 trillion won ($7.9 billion) as part
of the country’s efforts to calm financial markets roiled by the spread of COVID-19.
March 24: Announced that it would double the planned economic rescue package
announced on March 18 to 100 trillion won ($80 billion) to save companies hit by the
COVID-19 and put a floor under crashing stocks and bond markets. It includes 29.1
trillion won in loans to small- and medium-sized companies and 20 trillion won will be
used to buy corporate bonds and commercial paper of companies facing a credit
crunch. As part of the rescue package, the Financial Services Commission will
establish a 10.7 trillion won facility set up to stabilize stock markets. It will also
commence a bond buying facility in April that will be funded by 84 institutions,
including the Bank of Korea, commercial banks and insurers.
March 29: Announced that an ―emergency disaster relief payment‖ of up to 1 million
won ($820) would be made to all households (except the top 30% by income),
totaling some 9.1 trillion won ($7.44 billion). It is also preparing another extra budget
worth 7.1 trillion won ($5.80 billion) for parliamentary approval in April, and will
exempt some small and medium-sized companies from paying utility bills.
Spain Government of Spain
March 12: Approved the creation of a 2.8 billion euro ($3 billion) aid package to
help regional authorities mitigate the economic impact from COVID-19, and
announced a 1 billion euro contribution to the health ministry’s budget and 14 billion
euros ($15.1 billion) in liquidity for small and medium companies (e.g., small
businesses affected by the outbreak would be exempt from paying taxes for six
months). It also announced that it would open a 400 million euro credit line to aid
the tourism industry.
March 17: Unveiled a package of 200 billion euros ($219 billion) to mitigate the
effects of COVID-19 (117 billion euros will be mobilized by the state, with the rest
coming from private companies). It will include state-backed credit guarantees for
companies, loans and aid for vulnerable people, a moratorium on mortgage payments
and evictions; the government will also guarantee water, electricity and internet to
for people adversely affected.
Sri Lanka March 16: The Central Bank of Sri Lanka cut the Standing Deposit Facility Rate
(SDFR) and the Standing Lending Facility Rate (SLFR) by 25 basis points to 6.25% and
7.25%, respectively, and the Statutory Reserve Ratio (SRR) on all rupee deposit
liabilities of licensed commercial banks was reduced by 1 percentage point to 4%
March 16: The Colombo Stock Exchange was closed until March 19, as the
government extended the public holiday in a bid to halt the spread of COVID-19 in
the country.
April 3: The Central Bank of Sri Lanka cut by a further 25 basis points its benchmark
interest rates (the Standing Deposit Facility Rate and Standing Lending Facility Rate to
6.00% and 7.00%, respectively), its second such reduction in three weeks, in a move
to support the economy amid the coronavirus pandemic.
Sweden Sveriges Riksbank
March 13: Stated that it would lend up to 500 billion crowns ($51 billion) to
Swedish companies via banks to shore up credit flows as the epidemic wreaks havoc
on financial markets.
March 16: Announced that it would buy securities for up to an additional 300 billion
Swedish crowns ($31 billion) in 2020 to facilitate credit supply and mitigate the
downturn in the economy caused by the COVID-19, reduced the overnight lending
rate to banks to 0.2 percentage point above its repo rate (from 0.75 percentage
point), and indicated that it would be flexible with the collateral banks can use when
they borrow money from the Riksbank, giving lenders more scope to use mortgage
bonds as collateral.

Government of Sweden
March 16: Presented a package worth more than 300 billion Swedish crowns ($31
billion) to support the economy in the face of the COVID-19 pandemic. It included
measures such as the central government assuming the full cost for sick leave from
companies through the months of April and May 2020 and for temporary
redundancies due to the crisis, and allowing companies to put off paying tax and VAT
for up to a year (retroactive to the start of 2020).
Switzerland Swiss National Bank
March 23: Hiked its foreign currency interventions to their highest level since the
Brexit referendum in 2016 in an effort to stem the rise in the franc, which has
appreciated as investors sought safe assets while stock markets have plunged during
the coronavirus pandemic.
Government of Switzerland
March 13: Unveiled an emergency economic-aid package of roughly 10 billion francs
($10.5 billion) for workers and small businesses. It includes 8 billion francs for
―Kurzarbeit,‖ or short-time work, and 580 million francs in guaranteed bank loans.
March 20: Announced a new 32 billion franc ($32.56 billion) aid package to support
companies and workers hit by the widening COVID-19 outbreak. The bulk of the
cash (20 billion francs) will go into guarantees for bank loans to companies at ―very
modest‖ interest rates. Firms will be able to get loans worth up to 10% of their
revenue, to a maximum of 20 million francs. Amounts of 500,000 francs will be paid
out immediately and guaranteed by the government. The government’s short-time
working scheme would also be extended to fixed-term, temporary workers, and
trainees. The package follows one worth 10 billion francs announced on March 13,
bringing the total stimulus to 42 billion francs ($42.8 billion).
March 31: Announced that it is stepping up its funding plans in response to
government measures to cushion the economic impact of the pandemic, doubling the
volume of outstanding short-term money market instruments. The Federal Finance
Administration (FFA) will increase the outstanding volume of short-term money
market instruments, from around 6 billion francs ($6.24 billion) to 12 billion francs,
and will once again step up sales of its own Confederation bond holdings.
Taiwan Central Bank of the Republic of China (Taiwan)
March 19: Cut its benchmark rate by 25 basis points to 1.125%, and announced that
it would expand the scope of repurchase facility operations and provide banks with
T$200 billion ($6.6 billion) of financing to support small and medium sized companies
which have been hard hit by the COVID-19 outbreak.
Government of Taiwan
February 25: Approved a T$60 billion ($2 billion) package to help cushion the
impact of the COVID-19 outbreak on its export-reliant economy, including loans for
small businesses, subsidies for hard-hit tour agencies, tax cuts for tour bus drivers,
and vouchers to spend on food in night markets.
March 12: Announced that an additional T$40 billion ($1.33 billion) from the
Employment Stabilization Fund and the Tourism Development Fund would be
available to stimulate Taiwanese economy.
March 19: The president said that the government would help its hard-hit airline
industry access T$50 billion in financing, and did not rule out further economic
stimulus.
March 19: Authorized its National Stabilisation Fund to intervene and buy stocks on
the market, as the island’s bourse continues to fall on COVID-19 worries.
Thailand Bank of Thailand
March 20: Cut its key interest rate by 25 basis points to 0.75%, as the spread of
COVID-19 exerted further pressure on the Thai economy.

March 22: Together with the Ministry of Finance and the Securities and Exchange
Commission, announced three measures to address liquidity concerns and ensure the
functioning of local financial markets: (1) setting up a special facility that allows
commercial banks that purchase units in high-quality money market funds or daily
fixed-income funds to use them as collateral for liquidity support (initial estimate is 1
trillion baht); (2) creation of a 70-100 billion baht ―Corporate Bond Stabilization
Fund‖ that invests in high-quality, newly issued bonds by corporates that cannot fully
rollover maturing corporate bonds, and (3) Bank of Thailand will continue to
purchase government bonds to provide liquidity to the market.
Government of Thailand
March 10: Approved a stimulus package worth an estimated 400 billion baht ($12.74
billion) to help alleviate the impact of the COVID-19 outbreak. It includes 150 billion
baht of soft loans, a 20 billion baht fund to help firms and workers affected, and tax
benefits and support for utilities costs.
March 24: Approved a package of stimulus measures worth at least 117 billion baht
($3.56 billion) to try to mitigate the impact of the coronavirus outbreak. The
measures include cash handouts worth 45 billion baht for 3 million workers outside
the social security system; soft loans worth 60 billion baht; and tax breaks. Separately,
small firms will be offered 10 billion baht of loans and business tax payments will be
delayed.
March 30: Announced that it is preparing a third stimulus package, worth more than
500 billion baht ($15.3 billion), to alleviate the impact of the coronavirus crisis.
March 31: Agreed to triple the number of workers receiving cash handouts to nine
million to help ease the impact of the spreading coronavirus. It had previously planned
to provide cash handouts of 15,000 baht ($458) each to 3 million workers, taking the
total to 45 billion baht ($1.38 billion). Now its total handout will reach 135 billion
baht ($4.13 billion).
Tunisia Central Bank of Tunisia
March 17: Cut its key interest rate by 100 basis points to 6.75%, as it responded to
the negative impact of the COVID-19 on the global growth outlook.
April 1: Asked banks and financial institutions to suspend the distribution of 2019
dividends and allow customers to defer loan payments for three months as part of a
package to ease the social and economic effects of the coronavirus.
Government of Tunisia
March 21: Announced that it would allocate 2.5 billion dinars ($850 million) to
combat the economic and social effects of the COVID-19 health crisis. Among new
measures, the government will delay tax debts, postpone taxes on small- and
medium-sized businesses, delay repayment of low-income employee loans, and
provide financial assistance to poor families and those who have lost their jobs due to
the crisis and loans and aid to help companies affected.
March 23: The finance minister announced that the International Monetary Fund will
disburse $400 million to help the country face the effects of COVID-19.
March 28: The European Union granted Tunisia 250 million euros in aid to help it
cope with the economic and social effects of the viral outbreak.
Turkey Central Bank of Turkey
March 17: Lowered its benchmark one-week repo rate by 100 basis points to 9.75%,
as it responded to the negative impact of the COVID-19 on the global growth
outlook.
March 31: Announced emergency measures to stem the fallout from a growing
pandemic. It would (1) allow primary dealers to sell to the Bank (for a temporary
period) debt they purchased from the Unemployment Insurance Fund, (2) extend 60
billion lira ($9 billion) worth of rediscount credits, (3) add more lending options well
below its 9.75% policy rate, (4) hold swap auctions with six-month maturities for lira

against dollars, euros, or gold at an interest rate 125 basis points lower than the
policy rate, and (5) allow lenders to use mortgage- and asset-backed securities as
collateral for foreign exchange operations.
Government of Turkey
March 18: Unveiled a 100 billion-lira ($15.4 billion) plan to help businesses affected
by the COVID-19 pandemic. It includes measures from tax cuts and payment
deferrals for businesses to an increase in minimum pension payouts.
Ukraine March 19: The government published a new law that will exempt taxpayers from
paying the land and property taxes from March 1 to April 30, introduced a
moratorium on tax audits from March 18 to May 31, and suspended some tax-related
penalties from March 1 to May 31.
Uganda Bank of Uganda
March 24: Sold dollars in the interbank market to support the local currency, which
has been experiencing sharp depreciation due to COVID-19-related disruptions.
April 6: Cut its policy rate by 100 basis points to 8.0% to support the economy
which has been hit by the impact of COVID-19. It also announced that it had
―directed‖ commercial banks to defer all discretionary payments, such as dividends
and bonus payments, for at least 90 days from March.
United Arab Emirates Central Bank of the UAE
(UAE) March 15: Announced a 100 billion dirham ($27 billion) stimulus package to deal
with the economic effects of the COVID-19 pandemic; it cut the rate on one-week
certificates of deposit by 75 basis points and will also ease regulatory limits on loans.
April 5: Announced new measures to guarantee liquidity in the banking system in the
face of the pandemic, boosting its stimulus to a total of 256 billion dirhams ($70
billion) from a previously announced 100 billion dirhams ($27 billion) package. It also
halved banks’ reserve requirements for demand deposits to 7% from 14%, which will
inject about 61 billion dirhams of liquidity to support banks’ lending and liquidity
management, extended the duration of a previously announced deferral of loan
principal and interest payments for customers until the end of the year, and said
banks participating in the scheme can benefit from a capital buffer relief of 50 billion
dirhams until December 2021, among other measures.
Government of the UAE

March 30: Announced that it would inject funding into state-owned Emirates
Airlines to help it deal with the impact of COVID-19 on its business.
April 5: Announced that it would reinforce its stockpile of strategic goods and waive
residency visa fines for the rest of the year in response to the viral outbreak.
United Kingdom Bank of England
March 11: Cut its benchmark interest rate by half a percentage point, to 0.25%,
revived a program to support lending to small and midsize businesses, and reduced
bank capital requirements to further boost credit.
March 19: Cut its benchmark rate by 15 basis points to 0.1% to try to mitigate the
impact of COVID-19 on the British economy, added 200 billion pounds ($232 billion)
to its asset purchase program (including sovereign and private debt), increased its
banks’ borrowing allowance under the Term Funding Scheme for Small and Medium
Enterprises from 5% to 10% of participants’ stock of real economy lending, and
cancelled its 2020 stress test of the 8 major UK banks.
April 2: Announced that it will double the size of its corporate bond purchase
program to at least 20 billion pounds ($24.7 billion), part of a previously announced
stimulus package to help the economy. It will begin ramping up its corporate bond
purchases through a series of reverse auctions starting on April 7, holding three a
week, and it will be able to buy 20 million pounds of any single bond—double the
previous amount.

UK Government
March 11: Announced a stimulus package totaling 30 billion pounds ($39 billion). It
will include 7 billion pounds ($8.6 billion) available to support the labor market, 5
billion pounds ($6.1 billion) to help the health-care system, and 18 billion pounds ($22
billion) to support the UK economy, bringing the total fiscal stimulus to 30 billion
pounds ($39 billion). (Among the specific measures, there will be a tax cut for
retailers, cash grants to small businesses, a mandate to provide sick pay for people
who need to self-isolate, subsidies to cover the costs of sick pay for small businesses,
and expanded access to government benefits for the self-employed and unemployed.)
March 17: Unveiled a package of 350 billion pounds ($424 billion) to support the
economy; it includes 330 billion pounds of guaranteed loans for businesses that need
cash to pay rent or suppliers, 20 billion pounds of tax cuts and grants for businesses
in 2020, a three-month mortgage payment holiday for borrowers affected by the
virus, and a one-year ―business rates‖ holiday for businesses in the retail, leisure, and
hospitality industry.
March 28: Will ease regulations for affected businesses, including simplifying the
insolvency system to keep companies trading, easing administrative requirements and
barriers to the import of personal protective equipment, and helping new companies
produce and distribute hand sanitizer within a matter of days.
Vietnam State Bank of Vietnam
February 24: Ordered commercial banks to eliminate, cut, or delay interest
payments on loans to companies facing losses due to the coronavirus outbreak.
March 16: Cut by 100 basis points both its refinance rate (to 5%) and the overnight
lending rate in the inter-bank market (to 6%), and by 50 basis points its discount rate
(to 3.5%).
Government of Vietnam
March 3: Announced measures worth 27 trillion dong ($1.16 billion) to help
businesses cope with the coronavirus epidemic and help the economy stick to its
6.8% growth target this year. They include tax breaks, delayed tax payments, and a
reduction in land lease fees. The government will also speed up state spending on
infrastructure projects.
Zimbabwe Reserve Bank of Zimbabwe
March 26: Cut its main lending rate to 25% from 35% and set a fixed exchange rate
(at 25 Zimbabwe dollars to the U.S. dollar) as part of measures to support the
economy. It indicated that it had suspended the managed floating exchange rate
system to provide for greater certainty in the pricing of goods and services in the
economy.
Government of Zimbabwe
March 29: Published new exchange control regulations making it legal for
Zimbabweans to use electronic and cash foreign currencies in domestic transactions,
as the country readies for a 21-day lockdown to prevent the spread of COVID-19.

Multi-Country and March 4: The International Monetary Fund (IMF) made $50 billion in loans
International available to deal with the COVID-19 through its rapid-disbursing emergency financing
Institutions’ facilities, including $10 billion of zero-interest loans to the poorest IMF member
Responses countries. On March 16, the IMF announced that it ―stands ready to mobilize its $1
trillion lending capacity to help our membership" and that it has ―40 ongoing
arrangements—both disbursing and precautionary—with combined commitments of
about $200 billion,‖ some of which could be used for this crisis, and that it is aiming
to boost its debt relief fund to $1 billion from its current level of $400 million.
March 3: The World Bank announced an initial package of up to $12 billion in
loans for countries to help countries cope with the effects of the COVID-19
outbreak. Specifically, it comprises up to $2.7 billion new financing from IBRD, $1.3
billion from IDA, complemented by reprioritization of $2 billion of the Bank’s existing
portfolio, and $6 billion from IFC, as well as policy advice and technical assistance ($8
billion is new funding and the remaining $4 billion is redirected from current lines of
credit).
March 11: The Inter-American Development Bank (IADB) announced that it
has up to $2 billion in resources that can be programmed to countries requesting
support for disease monitoring, testing and public health services, and that it could
work with countries that have undisbursed loan balances to redirect resources to
pandemic-response efforts.
March 13: The European Bank for Reconstruction and Development
(EBRD) unveiled an emergency €1 billion ―Solidarity Package‖ of measures to help
companies across its regions deal with the impact of the COVID-19 pandemic. Under
the emergency program, the EBRD will set up a ―resilience framework‖ to provide
financing for existing EBRD clients with strong business fundamentals experiencing
temporary credit difficulties, comprising emergency liquidity, working capital and
trade finance.
March 15: The Bank of Canada, the Bank of England, the Bank of Japan, the
European Central Bank, the U.S. Federal Reserve, and the Swiss National Bank
agreed to lower the pricing on the standing US dollar liquidity swap arrangements by
25 basis points, so that the new rate will be the US dollar overnight index swap (OIS)
rate plus 25 basis points.
March 16: The European Investment Bank Group (EIBG) proposed a 40
billion euro financing package consists of dedicated guarantee schemes to banks based
on existing program for immediate deployment (20 billion euros), liquidity lines to
banks to ensure additional working capital support for SMEs and mid-caps (10 billion
euros), and asset-backed securities purchasing programs to allow banks to transfer
risk on portfolios of SME loans (10 billion euros).
March 16: The Islamic Development Bank (IsDB) Group announced that it is
setting-up a special ―Strategic Preparedness and Response Facility‖ of $730 million to
mitigate the negative health and socio-economic impact of the COVID-19 pandemic.
It will include $280 million from the Bank and Islamic Solidarity Fund for
Development (ISFD) for sovereign projects and programs, $300 million from
International Islamic Trade finance Corporation (ITFC) for trade finance and $150
million from the Islamic Corporation for the Insurance of Investment and Export
Credit (ICIEC) for insurance coverage.
March 16: The Central American Bank for Economic Integration (CABEI)
granted a nonreimbursable financial package worth $8 million to the eight countries
of the Central American Integration System in order to combat the widening
economic fallout from the COVID-19 (Guatemala, El Salvador, Honduras, Nicaragua,
Costa Rica, Panama, Belize, and the Dominican Republic will each receive $1 million).
March 18: The Asian Development Bank (ADB) announced a $6.5 billion initial
package to address the immediate needs of its developing member countries (DMCs)
as they respond to the COVID-19 pandemic. The initial package includes
approximately $3.6 billion in sovereign operations for a range of responses to the
health and economic consequences of the pandemic, $1.6 billion in non-sovereign
operations for micro, small, and medium-sized enterprises, domestic and regional
trade, and firms directly impacted, about $1 billion in concessional resources through
Congressional Research Service R46270 · VERSION 21 · UPDATED 71

reallocations from ongoing projects and assessing possible needs for contingencies,
and $40 million in technical assistance and quick-disbursing grants. (Since February
2020, ADB has provided more than $225 million to meet urgent needs of both
governments and businesses in DMCs.)
March 19: The U.S. Federal Reserve announced the establishment of temporary
U.S. dollar liquidity arrangements (swap lines) with 9 central banks to help lessen
strains in global U.S. dollar funding markets. These new facilities will support the
provision of U.S. dollar liquidity in amounts up to $60 billion each for the Reserve
Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de
Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank, and $30
billion each for the Danmarks Nationalbank, the Norges Bank, and the Reserve Bank
of New Zealand.
March 19: The Board of Directors of the New Development Bank approved
RMB 7 billion ($1 billion) Emergency Assistance Program Loan to the People’s
Republic of China. The Program will help finance urgent and unexpected public health
expenditures in Hubei, Guangdong, and Henan.
March 20: The Development Bank of Latin America (CAF) announced that it
has opened an additional $2.5 billion line of credit to support the measures that
member countries are taking to mitigate the effects of COVID-19. On March 3, it
approved a credit line worth $300 million to manage emergencies related to COVID-
19 and the possibility of granting technical help of up to $5 million for initiatives
related to the outbreak in countries across the region.
March 26: The Group of 20 (G20) announced that it would inject ―over $5 trillion
into the global economy, as part of targeted fiscal policy, economic measures, and
guarantee schemes to counteract the social, economic and financial impacts‖ of
COVID-19.
Source: Congressional Research Service based on information from news articles and press releases.
Author Information
James K. Jackson, Coordinator Andres B. Schwarzenberg

Specialist in International Trade and Finance Analyst in International Trade and Finance
Martin A. Weiss Rebecca M. Nelson

Specialist in International Trade and Finance Specialist in International Trade and Finance
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS‘s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.


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Global Economic Effects of COVID-19

Updated May 1, 2020

Congressional Research Service

Congressional Research Service

Congressional Research Service

Economist, March 17, 2020. https://www.economist.com/international/2020/03/17/governments-are-still-struggling-to-

https://www.ft.com/content/3bf48b80-8fba-410c-9bb8-31e33fffc3b8; Hall, Benjamin, Coronavirus Pandemic

Congressional Research Service 1

Figure 1. IMF Projected Government Fiscal Balances Relative to GDP

Source: Fiscal Monitor, International Monetary Fund, April 14, 2020.

Congressional Research Service 2

11, 2020, https://www.npr.org/sections/goatsandsoda/2020/03/11/814474930/COVID-19-COVID-19-is-now-officially-

Congressional Research Service 3

Cooperation and Development. March 2, 2020. http://www.oecd.org/economic-outlook/#resources.

Congressional Research Service 4

Table 1. OECD and IMF Economic Forecasts

2019 2020 2021 2019 2020 2021

Advanced economies as a group are forecast to experience an economic contraction in 2020 of

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Figure 2. Gross Domestic Product, Percentage Change

20 World Economic Outlook, p. 9.

Congressional Research Service 6

and Development, March 27, 2020.

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2018 2019 2020 2021 2020 2021

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Economic Policy Challenges

Washington Post, March 5, 2020. https://www.washingtonpost.com/world/2020/03/05/COVID-19-live-updates/.

Congressional Research Service 9

February 28. https://www.ft.com/content/4b23a140-59d3-11ea-a528-dd0f971febbc.

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International Monetary Fund, March 4, 2020. https://blogs.imf.org/2020/03/04/potential-impact-of-the-COVID-19-

Times, March 26, 2020. https://www.ft.com/content/79c0ae80-6df1-11ea-89df-41bea055720b.

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Figure 3. Dow Jones Industrial Average

Source: Financial Times.

Dollars,‖ Financial Times, March 31, 2020. https://www.ft.com/content/6c976586-a6ea-42ec-a369-9353186c05bb.

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Figure 4. U.S. Dollar Trade-Weighted Broad Index, Goods and Services

Source: St. Louis Federal Reserve Bank.

Financial Times, March 9, 2020. https://www.ft.com/content/8273a32a-61e4-11ea-a6cd-df28cc3c6a68.

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March 9, 2020. https://www.ft.com/content/e8c7b5f0-6200-11ea-a6cd-df28cc3c6a68.

Political Motive,‖ Washington Post, March 12, 2020. https://www.washingtonpost.com/world/europe/europe-

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Corporate Debt Crisis?‖ Financial Times, March 12, 2020. https://www.ft.com/content/4455735a-63bc-11ea-b3f3-

Funding,‖ Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/COVID-19-latest-

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Times, March 16, 2020. https://www.ft.com/content/dd76d42a-678b-11ea-a3c9-1fe6fedcca75.

March 16, 2020. https://www.ft.com/content/318ae26c-6733-11ea-800d-da70cff6e4d3.

March 18, 2020. https://www.ft.com/content/69fc6e2a-69d3-11ea-a3c9-1fe6fedcca75.

18, 2020. https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html.

March 18, 2020. https://www.ft.com/content/5919c6fb-1f5f-315d-8353-94f04afcf340.

Financial Times, March 18, 2020. https://www.ft.com/content/feae3808-6949-11ea-800d-da70cff6e4d3.

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announced a moratorium on share repurchases, or stock buy-backs, denying equity markets a

Figure 5. Brent Crude Oil Price per Barrel in Dollars

Source: Markets Insider.

Financial Times, March 20, 2020. https://www.ft.com/content/97186440-6aa0-11ea-800d-da70cff6e4d3.

Financial Times, March 20, 2020, https://www.ft.com/content/826d465a-6ac3-11ea-a3c9-1fe6fedcca75.

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March 23, 2020. https://www.oecd.org/coronavirus/#op-ed.

Times, March 24, 2020. https://www.ft.com/content/f5ebabd4-6dad-11ea-89df-41bea055720b.